As Filed With The Securities And Exchange Commission On August 13, 2003
File No. 811-3651
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _1_
Post-Effective Amendment No. __
TOUCHSTONE STRATEGIC TRUST
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(Exact Name of Registrant as Specified in Charter)
221 East Fourth Street, Suite 300, Cincinnati, Ohio 45202
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(Address of Principal Executive Offices) (Zip Code)
(800) 543-0407
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(Registrant's Telephone Number, Including Area Code)
Patrick T. Bannigan
221 East Fourth Street, Suite 300
Cincinnati, Ohio 45202
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(Name and Address of Agent for Service of Process)
Copies to:
Tina Hosking Bloom
221 East Fourth Street, Suite 300
Cincinnati, Ohio 45202
Samuel Kornhauser, Esq.
155 Jackson Street, Suite 1807
San Francisco, California 94111
Approximate Date of Proposed Public Offering is as soon as practicable after
this Registration Statement becomes effective.
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) under the Investment Company
Act of 1940; accordingly, no fee is payable herewith. The Registrant has
undertaken to file on or before June 30, 2004, a Rule 24f-2 Notice for its most
recent fiscal year ended March 31, 2004.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
TOUCHSTONE STRATEGIC TRUST
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following
pages and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Letters to Shareholders
Notice of Special Meeting
PART A
Combined Prospectus/Proxy Statement
PART B
Statement of Additional Information
PART C
Other Information
Signatures
Exhibits
THE NAVELLIER PERFORMANCE FUNDS
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
August __, 2003
TO THE SHAREHOLDERS OF
THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
Dear Shareholder:
A special meeting of the shareholders of The Navellier Large Cap Growth
Portfolio (the "Portfolio"), a series of The Navellier Performance Funds will be
held at 10:00 A.M., Pacific Standard Time, on September 12September 19, 2003, or
a date shortly thereafter, at the offices of The Navellier Performance Funds,
One East Liberty Street Third Floor, Reno, Nevada 89501 (the "Meeting"). The
shareholders of the Portfolio (the "Shareholders") will vote on a proposed
Agreement and Plan of Reorganization (the "Plan"). Under the Plan, the Navellier
Large Cap Growth Portfolio of The Navellier Performance Funds and The Navellier
Large Cap Growth Portfolio of The Navellier Millennium Funds will merge into the
Touchstone Large Cap Growth Fund (the "Acquiring Fund"), a separate portfolio of
the Touchstone Strategic Trust (the "Reorganization"). Upon completion of the
proposed Reorganization, the investment strategies of the Touchstone Large Cap
Growth Fund will be changed to those of Navellier Large Cap Growth Portfolios.
Touchstone Large Cap Growth's investment objective is identical to the
investment objective of Navellier Large Cap Growth and Touchstone Large Cap
Growth's investment policies will be substantially identical to those of
Navellier Large Cap Growth. In addition, the investment manager of Touchstone
Large Cap Growth will change the investment sub-advisor of Touchstone Large Cap
Growth to the manager of the Navellier Large Cap Growth, Navellier Management,
Inc. The Acquiring Fund has three classes of shares. The Class 'A' shares charge
an initial sales charge of 5.75%. The Class 'B' shares charge a contingent
deferred sales charge which is incrementally reduced over time from 5% on
redemptions within a year of purchase down to 0% on redemptions after six years.
The Class 'C' shares charge a 1% contingent deferred sales charge on redemptions
within one year of purchase. However, this will not affect you since you will be
a Class 'A' shareholder of the Acquiring Fund and will not be charged a sales
load. You may continue to purchase Class 'A' shares of the Acquiring Fund after
the reorganization without a sales load for as long as you maintain an open
account in the Acquiring Fund. Like the Portfolio, the Class 'A' Shares of the
Acquiring Fund are charged an annual 12b-1 fee of 0.25%.
The Acquiring Fund charges an annual management fee of 0.75% of assets
under management which is less than the annual 0.84% you are charged now.
The total annual net operating expenses of the Class 'A' shares of the
Acquiring Fund for 2002 were 1.37% which is less than the total annual net
operating expenses of the Portfolio for 2002 which were 1.49%.
If the Plan is approved and implemented by the Portfolio, the Shareholders
of the Portfolio will become shareholders of the Acquiring Fund and will receive
shares of the Acquiring Fund having an aggregate value equal to the aggregate
value of his or her investment in the Portfolio. No sales charge will
be imposed as a result of the Reorganization. The Acquiring Fund and the
Portfolio have received an opinion of counsel indicating that the Reorganization
will qualify as a tax-free reorganization for Federal income tax purposes.
I and the Trustees of the Portfolio by a unanimous vote have voted in FAVOR
of the proposed merger and are urging you and the other Portfolio Shareholders
to vote FOR a merger of the Portfolio into the Acquiring Fund. I and the other
Portfolio Trustees are soliciting your proxy (vote)because we believe that the
proposed merger should benefit Shareholders by reducing portfolio operating
costs.
We believe that this Reorganization is in the best interest of the
Portfolio and the Shareholders and, therefore, recommend that the Shareholders
vote FOR approving the Plan.
WE STRONGLY URGE YOU TO REVIEW, COMPLETE, AND RETURN YOUR WHITE PROXY CARD
AS SOON AS POSSIBLE. YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
VOTING YOUR SHARES EARLY WILL HELP TO AVOID COSTLY FOLLOW-UP MAIL AND TELEPHONE
SOLICITATION. LOUIS NAVELLIER AND NAVELLIER MANAGEMENT, INC. ARE PAYING FOR THIS
PROXY SOLICITATION AND WILL NOT SEEK REIMBURSEMENT FROM THE PORTFOLIO OR YOU.
AFTER REVIEWING THE ENCLOSED MATERIALS, PLEASE EXERCISE YOUR RIGHT TO VOTE TODAY
AND VOTE FOR THE MERGER BY COMPLETING, DATING, AND SIGNING EACH PROXY CARD YOU
RECEIVE AND MAILING THE PROXY IN THE SELF-ADDRESSED, POSTAGE-PAID ENVELOPE TO
THE NAVELLIER PERFORMANCE FUNDS AT ONE EAST LIBERTY ST., THIRD FLOOR, RENO,
NEVADA 89501. IT IS VERY IMPORTANT THAT YOU VOTE AND THAT YOUR VOTING
INSTRUCTIONS BE RECEIVED NO LATER THAN SEPTEMBER 15, 2003 OR A DATE SHORTLY
THEREAFTER.
Please note that you may receive more than one proxy package if you hold
shares of the Portfolio in more than one account. You should return separate
proxy cards for each such account. If you have any questions, please call
Navellier Management, Inc. at 1-800-887-8671.
Sincerely,
Louis G. Navellier
/s/ Louis G. Navellier
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Trustee of The Navellier Large
Cap Growth Portfolio of The
Navellier Performance Funds
THE TRUSTEES OF
THE NAVELLIER PERFORMANCE FUNDS
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
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THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD September 19, 2003 OR A DATE SHORTLY THEREAFTER
To: The Shareholders of the Navellier Large Cap Growth Portfolio of The
Navellier Performance Funds
You are hereby notified that a Special Meeting of the Shareholders of The
Navellier Large Cap Growth Portfolio of The Navellier Performance Funds will be
held at the offices of The Navellier Performance Funds, One East Liberty Street,
Third Floor, Reno, Nevada 89501 on September 19, 2003 or a date shortly
thereafter at 10:00 a.m. (Pacific Standard Time), for the purpose of considering
and voting upon the following matter:
PROPOSAL 1.
To approve a proposed Agreement and Plan of Reorganization (the "Plan"),
whereby The Navellier Large Cap Growth Portfolio ("Portfolio") would
transfer all of its assets to the Large Cap Growth Fund, a portfolio of the
Touchstone Strategic Trust (the "Acquiring Fund") in a tax-free exchange
for shares of beneficial interest in the Acquiring Fund that would be
distributed to the shareholders of the Portfolio. Also, as part of the
Plan, the Acquiring Fund would assume all valid liabilities of the
Portfolio. Also, as part of the Plan, the Acquiring Fund would acquire all
of the assets and liabilities of the Navellier Large Cap Growth Portfolio
of the Navellier Millennium Funds.
The transactions contemplated by the proposed Plan and related matters are
described in the attached Combined Prospectus/Proxy Statement. A copy of the
proposed Plan is attached as Appendix A thereto. A copy of the Investment
Advisory Agreement between the Acquiring Fund and Touchstone Advisors, Inc. and
a copy of the form of the sub-advisory agreement between Touchstone Advisors,
Inc. and Navellier Management, Inc., reducing the total annual management fee
that will be charged to you after the merger to 0.75% of the Acquiring Fund's
net asset value per annum are attached thereto as Appendix B and Appendix C
respectively. A copy of the Acquiring Fund's 12b-1 Plan is attached thereto as
Appendix D.
You are entitled to vote at the Meeting, and any adjournment(s) thereof, if
you owned shares of the Portfolio at the close of business on June 30, 2003. If
you attend the Meeting, you may vote your shares in person. If you do not expect
to attend the meeting, please complete, date, sign, and return the enclosed
proxy card marked FOR in the enclosed self-addressed, postage-paid return
envelope.
Louis G. Navellier
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Trustee of The Navellier Large
Cap Growth Portfolio of The
Navellier Performance Funds
August 13, 2003
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
PLEASE VOTE "FOR" PROPOSAL 1 ON THE ENCLOSED WHITE PROXY CARD, THEN PLEASE
DATE AND SIGN THE CARD AND RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED. IF
YOU SIGN, DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR
SHARES WILL BE VOTED "FOR" THE PROPOSAL NOTICED ABOVE. IN ORDER TO AVOID THE
ADDITIONAL EXPENSE AND DELAY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN
MAILING IN YOUR WHITE PROXY CARD PROMPTLY SO THAT A QUORUM MAY BE ENSURED. A
VOTE OF 67% OF THE SHARES OF THE PORTFOLIO WHICH ARE PRESENT IN PERSON OR BY
PROXY AND ENTITLED TO VOTE (IF MORE THAN 50% OF THE OUTSTANDING SHARES OF RECORD
ARE PRESENT IN PERSON OR BY PROXY) OR MORE THAN 50% OF THE OUTSTANDING SHARES
ENTITLED TO VOTE, WHICHEVER IS LESS, IS REQUIRED TO PASS ANY PROPOSAL, SO RETURN
OF YOUR PROXY IS IMPORTANT. UNLESS PROXY CARDS SUBMITTED BY CORPORATIONS AND
PARTNERSHIPS ARE SIGNED BY THE APPROPRIATE PERSONS AS INDICATED IN THE VOTING
INSTRUCTIONS ON THE PROXY CARD, SUCH PROXY CARDS CANNOT BE VOTED.
Louis G. Navellier
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Trustee of The Navellier Large
Cap Growth Portfolio of The
Navellier Performance Funds
PROXY SOLICITATION
BY
THE TRUSTEES OF
THE NAVELLIER LARGE CAP GROWTH PORTFOLIO OF
THE NAVELLIER PERFORMANCE FUNDS
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ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
COMBINED PROSPECTUS/PROXY STATEMENT
This combined prospectus/proxy statement is being furnished in connection
with the solicitation of proxies by the Trustees of The Navellier Large Cap
Growth Portfolio ("Portfolio") of The Navellier Performance Funds ("Fund"), for
use at a special meeting of shareholders ("Shareholders") of the "Portfolio" to
be held at 10:00 a.m., Pacific Standard Time, on September 19, 2003, at the
offices of The Navellier Performance Funds, One East Liberty Street, Third
Floor, Reno, Nevada 89501, and at any adjournment(s) thereof (the "Meeting").
The Meeting is being held so that shareholders can vote on the following
proposal made by the Trustees of the Portfolio:
PROPOSAL 1.
To approve a proposed Agreement and Plan of Reorganization (the
"Plan"), whereby the Portfolio would transfer all of its assets to the
Large Cap Growth Fund, a portfolio of the Touchstone Strategic Trust (the
"Acquiring Fund"), in a tax-free exchange for shares of beneficial interest
in the Acquiring Fund that would be distributed to the shareholders of The
Portfolio. Also, as part of the Plan, the Acquiring Fund would assume all
valid liabilities of The Portfolio. Also, as part of the Plan, the
Navellier Large Cap growth Portfolio of the Navellier Millennium Funds
("Millennium Portfolio") would transfer all of its assets and valid
liabilities to the Acquiring Fund.
The Portfolio is a series investment company organized by Louis Navellier
as a Business Trust in the State of Delaware with one class of common stock
outstanding, with such class representing an interest in a separate series of
the Fund. Only shareholders of the Portfolio are being solicited in connection
with the Meeting.
The purpose of the Meeting is to consider a proposed Plan of Reorganization
(the "Plan"), which would effect a merger of the Portfolio and also the merger
of the Millennium Portfolio into the Acquiring Fund, and the transactions
contemplated thereby, as described below (collectively, the "Reorganization").
The Acquiring Fund is a series open-end investment company which seeks long-term
growth of capital by investing in large cap growth securities. The Plan has been
approved unanimously by the Board of Trustees of the Portfolio, by the Board of
Trustees of the Millennium Portfolio and by the Board of Trustees of the
Acquiring Fund. Pursuant to the proposed Plan, all of the assets of the
Portfolio and all of the assets of the Millennium Portfolio would be acquired by
the Acquiring Fund (which has investment policies the same as those of the
Portfolio), in a tax-free exchange for shares of beneficial interest in the
Acquiring Fund ("Acquiring Fund Shares") and the assumption by
the Acquiring Fund of all valid liabilities of the Portfolio and of the
Millennium Portfolio. Specifically, it is proposed that the assets of the
Portfolio and the assets of the Millennium Portfolio be transferred to the
Acquiring Fund in a tax-free exchange for Acquiring Fund Shares of value equal
to the assets transferred from the Portfolio and from the Millennium Portfolio.
Following such transfer, the Acquiring Fund Shares received by the Portfolio
would then be distributed pro rata to the shareholders of the Portfolio, and
then the Portfolio would be liquidated. As a result of the proposed
transactions, each shareholder of the Portfolio would receive a number of full
and fractional Acquiring Fund Shares having a total net asset value equal, on
the effective date of the Reorganization, to the net asset value of the
Shareholder's shares of beneficial interest in the Portfolio. In order to have a
merger, the Trustees of the Portfolio and the Trustees of the Millennium
Portfolio and the Trustees of the Acquiring Fund must approve the proposed
merger. The Trustees of the Portfolio and of the Millennium Portfolio and the
Trustees of the Acquiring Fund have already approved the proposed merger.
This combined prospectus/proxy statement, which should be retained for
future reference, sets forth concisely the information about the Portfolio and
the Acquiring Fund, and the transactions contemplated by the proposed
Reorganization, that an investor should know before voting on the proposed
Reorganization. A copy of the Annual Report of the Touchstone Strategic Trust
related to the Acquiring Fund for the year ended March 31, 2003 and a copy of
the current Prospectus of the Acquiring Fund dated August 1, 2003 are included
with this combined prospectus/proxy statement for each Shareholder of the
Portfolio, and are incorporated by reference herein.
A Statement of Additional Information regarding Touchstone Strategic Trust
dated August 1, 2003 has been filed with the Securities and Exchange Commission
(the "Commission") and is incorporated by reference herein. Copies of such
Prospectus, Statement of Additional Information and financial reports also may
be obtained without charge by contacting Touchstone Investments at 221 East
Fourth Street, Suite 300, Cincinnati, Ohio 45202, or by telephoning toll-free at
1-800-543-0407 or at http://www.touchstoneinvestments.com.
A Prospectus and a Statement of Additional Information of the Navellier
Performance Funds regarding the Portfolio each dated May 1, 2003 and the Annual
Report of the Navellier Performance Funds for the year ended December 31, 2002
also have been filed with the Commission and each is incorporated by reference
herein.
Copies of these Portfolio documents also may be obtained without charge by
contacting Navellier Management, Inc., at One East Liberty Street, Third Floor,
Reno, Nevada 89501, or by telephoning Navellier Management, Inc., toll-free at
1-800-887-8671.
A Statement of Additional Information dated August 13, 2003, relating to
the proposed transactions described in this combined prospectus/proxy statement,
including historical financial statements, has been filed with the Commission
and is incorporated by reference herein. Copies of this Statement of Additional
Information may be obtained without charge by contacting Navellier Management,
Inc., at One East Liberty Street, Third Floor, Reno, Nevada 89501, or by
telephoning Navellier Management, Inc., toll-free at 1-800-887-8671.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Combined Prospectus/Proxy Statement is August 13, 2003.
COMBINED PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
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Introduction and Voting Information
Special Meeting
Synopsis
The Proposed Reorganization
Investment Objectives and Policies
Operations of the Touchstone Strategic Trust and the Acquiring Fund following
the Reorganization
Management Fees, Administrative Fees, and Other Operating Expenses
Purchases and Exchanges
Redemption Procedures and Fees
Dividends and Distributions; Automatic Reinvestment
Federal Tax Consequences of the Proposed Reorganization
Costs and Expenses of the Reorganization
Continuation of Shareholder Accounts; Share Certificates
Form of Organization of the Touchstone Strategic Trust
Comparison of Investment Objectives and Policies
Investment Objectives and Policies
Investment Objective of the Acquiring Fund
Investment Objective of the Portfolio
Certain Investment Restrictions and Limitations
Principal Risk Factors
The Proposed Transactions
Proposed Agreement and Plan of Reorganization
Reasons for the Proposed Transactions
Description of Securities to Be Issued
Federal Income Tax Consequences
Pro Forma Capitalization and Ratios
Dissolution of the Portfolios
Navellier Group Recommendation
Required Vote
Additional Information About the Acquiring Fund and the Acquiring Fund Shares
Additional Information About the Portfolio and the Portfolio Shares
Miscellaneous
Available Information
Legal Matters
Financial Statements and Experts
Revocation of Proxies
No Dissenters' Rights of Appraisal.
Additional Voting Information; Voting of Proxies; Adjournment Proxy Solicitation
Other Business
Appendix A: Agreement and Plan of Reorganization
Appendix B: Investment Advisory Agreement Between Acquiring Fund and Touchstone
Advisors, Inc.
Appendix C: Form of Sub-advisory Agreement between Touchstone Advisors, Inc. and
Navellier Management, Inc
Appendix D: Acquiring Fund of Distribution Plan
PART A
SOLICITATION BY THE TRUSTEES OF
THE NAVELLIER PERFORMANCE FUNDS
ONE EAST LIBERTY STREET, THIRD FLOOR
RENO, NEVADA 89501
1-800-887-8671
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THE NAVELLIER PERFORMANCE FUNDS
(THE NAVELLIER LARGE CAP GROWTH PORTFOLIO)
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COMBINED PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
September 19, 2003 OR A DATE SHORTLY THEREAFTER
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INTRODUCTION AND VOTING INFORMATION
SPECIAL MEETING; VOTING OF PROXIES; ADJOURNMENT
This combined prospectus/proxy statement is being furnished to the
shareholders of The Navellier Performance Funds' Navellier Large Cap Growth
Portfolio ("Portfolio") in connection with the solicitation by the Trustees of
the Portfolio, (collectively "your Trustees") of proxies to be used at a special
meeting of the shareholders of this Portfolio to be held on September 19, 2003
or a date shortly thereafter at 10:00 a.m. Pacific Standard Time at the offices
of The Navellier Performance Funds, One East Liberty Street, Third Floor, Reno,
Nevada 89501 and at any adjournment(s) thereof (the "Meeting"). The purpose of
the Meeting is to vote on the proposed tax-free Reorganization (the "Plan") to
merge the Portfolio into the Large Cap Growth Fund (the "Acquiring Fund"), which
is a series of the Touchstone Strategic Trust, pursuant to the terms and
conditions of the Plan, as described below in greater detail. A vote on the
approval or disapproval of the Plan will be conducted at the Meeting by the
shareholders of the Portfolio.
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this combined prospectus/ proxy statement, including the prospectuses of the
Portfolio and the Acquiring Fund and the proposed Agreement and Plan of
Reorganization. Shareholders should read this entire combined prospectus/proxy
statement carefully.
THE PROPOSED REORGANIZATION
Shareholders of the Portfolio will be asked at the Meeting to vote upon and
approve the proposed Plan, which provides for the Reorganization of the
Portfolio. A copy of the Plan is set forth in Appendix A to this combined
prospectus/proxy statement. Pursuant to the Plan, the Portfolio, which
is a series of The Navellier Performance Funds, a non-diversified, open-end
management investment company organized as a business trust under the laws of
the State of Delaware, would be merged tax-free into the Acquiring Fund of the
Touchstone Strategic Trust (the "Trust"). Touchstone Large Cap Growth is
currently a separate diversified series of the Trust, a Massachusetts business
trust, which as also an open-end management investment company registered under
the 1940 Act. However, if the shareholders of the Touchstone Large Cap Growth
approve a proposal in a proxy statement filed with the Securities and Exchange
Commission ('SEC') and scheduled for a vote of such shareholders in a special
meeting on September 19, 2003, upon completion of the Reorganization Touchstone
Large Cap Growth will change to a non-diversified series of the Trust. A
non-diversified fund may invest up to 25% of its total assets in the securities
of a single company and 50% of its total assets could consist of the securities
of only two issuers. With respect to the remainder of the Fund's assets, no more
than 5% could be invested in any one security, and the Fund may not own more
than 10% of the outstanding voting securities of any issuer. In addition,
approval by the shareholders of Touchstone Large Cap Growth Fund of the change
of the Fund from a diversified to a non-diversifed series of the Trust is a
condition of the Reorganization. The Millennium Portfolio would also be merged
into the Acquiring Fund. Approval by the shareholders of the Millennium
Portfolio of the merger into the Acquiring Fund is also a condition of the
Reorganization. The proposed transaction will not occur unless shareholders
approve these changes. The Plan sets forth the terms and conditions under which
the proposed Reorganization may be consummated. Approval by the present Trustees
of the Portfolio is required in order to merge the Portfolio into the Acquiring
Fund. The present Trustees of the Portfolio have approved the proposed merger.
If the Reorganization is completed, the investment objective and investment
strategies of Touchstone Large Cap Growth will be changed to those of Navellier
Large Cap Growth (subject to the approval of the shareholders of Touchstone
Large Cap Growth to change that Fund to a non-diversified fund upon completion
of the Reorganization), and the investment manager of the Touchstone Large Cap
Growth will change the investment sub-advisor of the Touchstone Large Cap Growth
to the investment manager of Navellier Large Cap Growth, Navellier Management,
Inc. This Prospectus/Proxy statement has been prepared assuming that such
changes will take place.
For the reasons set forth below under "The Proposed Transactions -- Reasons
for the Proposed Transactions", the Trustees of the Portfolio have unanimously
concluded that the Reorganization would be in the best interests of the
Portfolio and its shareholders and that the interests of existing shareholders
will not be diluted as a result of the transactions contemplated by the
Reorganization. The Portfolio Trustees, therefore, have submitted the proposed
Plan effecting the proposed Reorganization for approval by the shareholders of
the Portfolio at the Meeting and recommend a vote FOR the proposed Plan.
INVESTMENT OBJECTIVES AND POLICIES
Below is a comparison of the key features of the Portfolio and the
Acquiring Fund.
INVESTMENT OBJECTIVE. The investment objective of the Acquiring Fund and
the Portfolio is long term growth of capital.
The investment objective of the Portfolio is a fundamental policy which may
not be changed without the approval of a vote of at least a "majority" (as that
term is defined in the 1940 Act) of the outstanding shares, respectively, of the
Portfolio or the Acquiring Fund. All other investment policies of the Portfolio
that are not specified as fundamental are not fundamental policies and may be
changed by the Acquiring Fund Board of Trustees and the Portfolio Board of
Trustees, respectively, without shareholder approval. The investment objective
of the Acquiring Fund is non-fundamental, which means that it may be changed by
vote of the Trustees without shareholder approval.
INVESTMENT POLICIES.
The Portfolio invests primarily in securities of large cap companies
(companies with market capitalization of more than $5 billion) with appreciation
potential by employing a modern portfolio theory to select securities. Navellier
Management, Inc., the investment adviser to the Portfolio and sub-advisor in
charge of managing the day to day investments of the Acquiring Fund will use the
same modern portfolio theory style of stock selection for the Acquiring Fund
that is used in the Portfolio.
The Portfolio is designed to achieve the highest possible returns while
minimizing risk. The selection process focuses on fast growing companies that
offer innovative products, services, or technologies to a rapidly expanding
marketplace. Navellier Management, Inc. uses an objective, "bottom-up,"
quantitative screening process designed to identify and select inefficiently
priced growth stocks with superior returns compared to their risk
characteristics.
The Portfolio mainly buys stocks of large cap companies (companies with
market capitalization of more than $5 billion) which are believed to be poised
to rise in price. The investment process focuses on "growth" variables
including, but not limited to, earnings growth, reinvestment rate, and operating
margin expansion.
Navellier Management, Inc. attempts to uncover stocks with strong return
potential and acceptable risk characteristics. To do this, a proprietary
computer model is used to calculate and analyze a "reward/risk ratio." The
reward/risk ratio is designed to identify stocks with above average market
returns and risk levels which are reasonable for higher return rates.
Navellier Management Inc.'s research team then applies two or more sets of
criteria to identify the most attractive stocks. Examples of these criteria
include earnings growth, profit margins, reasonable price/earnings ratios based
on expected future earnings, and various other fundamental criteria. Stocks with
the best combination of growth ratios are blended into a non-diversified
portfolio.
The Acquiring Fund will have after the merger the same investment
sub-advisor (Navellier Management, Inc.) managing the day to day investments
which the Portfolio has and will employ the same modern portfolio investment
style which is used by the Portfolio.
For further discussion of the comparisons in the investment policies of the
Acquiring Fund and of the Portfolio, see "Comparison of Investment Objectives
and Policies" in this combined prospectus/proxy statement.
OPERATIONS OF TOUCHSTONE STRATEGIC TRUST AND THE ACQUIRING FUND FOLLOWING THE
REORGANIZATION
Touchstone Strategic Trust and the Acquiring Fund will continue to operate
in substantially the same way as each did prior to the Reorganization. The
responsibilities, powers and fiduciary duties of the Trustees of the Acquiring
Fund are essentially the same as those of the Trustees of the Portfolio. Subject
to the provisions of the Touchstone Strategic Trust Declaration of Trust, dated
November 18, 1982 (the "Trust Declaration"), the business of Touchstone
Strategic Trust and the Acquiring Fund is managed by the Touchstone Strategic
Trust Board of Trustees (the "Board"), which has all powers necessary and
appropriate to carry out that business responsibility. The Board supervises the
business affairs and investments of the Acquiring Fund. The Acquiring Fund
receives investment advisory services from Touchstone Advisors, Inc. and will
receive sub-advisory investment services from Navellier Management, Inc. if the
Reorganization is approved by the Portfolio shareholders and by the Millennium
Portfolio shareholders. The Acquiring Fund receives distribution, marketing and
customer services from Touchstone Securities, Inc. pursuant to a Distribution
Agreement.
MANAGEMENT FEES, ADMINISTRATIVE FEES, AND OTHER OPERATING EXPENSES
MANAGEMENT AND FEES. Navellier Management, Inc., is the investment advisor
to the Portfolio pursuant to an investment management agreement between the
Portfolio and Navellier Management, Inc. (the "Portfolio Management Contract").
Touchstone Advisors, Inc. (the 'Manager') is the investment manager for the
Touchstone Large Cap Growth. The Manager selects and pays the fees of the
sub-advisor and monitors the sub-advisor's program. Navellier Management, Inc.
will manage the investment and reinvestment of the assets of the Acquiring Fund,
as sub-advisor after the merger, subject to the supervision of Touchstone
Advisors, Inc. and of the officers and Trustees of the Acquiring Fund. The
Portfolio pays Navellier Management, Inc. an investment advisory fee at an
annual rate of 0.84% of the aggregate average daily net asset value of the
Portfolio. The Acquiring Fund will pay to Touchstone Advisors, Inc. an
investment advisory fee at an annual rate of 0.75% of the aggregate average
daily net asset value of the Acquiring Fund. Under the terms of the Sub-Advisory
Agreement, Navellier Management, Inc. will be paid a fee of 0.45% of average
daily net assets by the Manager, Touchstone Advisors, Inc. The Acquiring Fund
does not pay a fee to the sub-advisor.
The Trust and the Manager have received an order from the SEC whereby under
certain circumstances, the Manager may select or change sub-advisors, enter into
new-sub-advisory agreements or amend existing sub-advisory agreements without
first obtaining shareholder approval. Pursuant to this order, upon completion of
the Reorganization, the Manager will change the sub-advisor of the Touchstone
Large Cap Growth to the Advisor of Navellier Performance Large Cap Growth.
ADMINISTRATIVE FEES AND OTHER OPERATING EXPENSES. The Portfolio pays its
own operating costs. Pursuant to an Administrative Services Agreement, the
Portfolio pays Navellier Management, Inc. an annual fee, pro rata monthly, of
0.25% of the aggregate average daily net asset value of the Portfolio to provide
administrative services including shareholder servicing services to the
Portfolio. Its net operating expenses in 2002 were 1.49%. The Acquiring Fund
pays it own operating expenses. Its net operating expenses after partial waiver
of reimbursement for the period ending December 31, 2002 were 1.37%.
12b-1 PLAN FEES. The Portfolio has a 12b-1 plan which charges 12b-1 fees of
0.25% annually. The Acquiring Fund has a 12b-1 plan for Class 'A' shares which
pays an annual fee of 0.25% of the aggregate average daily net asset value of
the Acquiring Fund for marketing, distribution and client services.
SALES LOAD. Shareholders of the Acquiring Fund currently pay a maximum
sales charge ("load") of 5.75% on all purchase of the Fund. Portfolio
shareholders will not be charged this sales load on purchases or new accounts
opened after the Reorganization.
The following sets forth the fund operating expenses (as a percentage of
the average daily net assets) for the Portfolio for the twelve-month period
ended December 31, 2002. Adjacent to the column for Portfolio expenses is
presented the expected fund operating expenses (as a percentage of the average
daily net assets) of the Acquiring Fund into which the Portfolio would merge
under the Plan.
TABLE
- --------------------------------------------------------------------------------
Touchstone Navellier Touchstone
Large Cap Growth Performance Large Combined Pro
Expense Cap Growth (1) Forma (2)
- --------------------------------------------------------------------------------
Management Fees 0.75% 0.84% 0.75%
- --------------------------------------------------------------------------------
Distribution 0.25% 0.25% 0.25%
- --------------------------------------------------------------------------------
Other Expenses 0.40% 1.11% 0.50%
- --------------------------------------------------------------------------------
Total Fund Expense 1.40% 2.22% 1.50%
- --------------------------------------------------------------------------------
Waiver - -0.71% -0.20%
- --------------------------------------------------------------------------------
Net Expense - 1.49% 1.30%
- --------------------------------------------------------------------------------
(1) Reflects Navellier's contractual waiver of reimbursement of a portion of
the Portfolio's operating expense. The Investment Advisor has also agreed
to this partial waiver of reimbursement for the fiscal year ended December
31, 2003.
(2) Touchstone Advisors, Inc. and the Trust have entered into an Expense
Limitation Agreement whereby the Total Annual Portfolio Operating Expenses
for the Class A shares of the Touchstone Large Cap Growth will not exceed
1.30% for the period ending upon consummation of the Reorganization and
will not exceed 1.30% for a two year period after consummation of the
Reorganization. After reimbursements, the Total Annual Fund Operating
Expenses of Touchstone Large Cap Growth for the period ended December 31,
2002 were 1.37%. The Proforma expenses shown above assume the consummation
of the Reorganziation, including the merger of the Navellier Millennium
Large Cap Portfolio into the Acquiring Fund.
As reflected above, it is expected that the Acquiring Fund will have lower
total operating expenses than those historically incurred by Portfolio. Mr.
Navellier believes that the lower management fee charged to the Acquiring Fund
and avoiding or reducing costs by merging the Portfolio into the Acquiring Fund
will save the Portfolio in excess of $50,000 per year by reducing the fees paid
to trustees, outside counsel to the independent trustees, reducing printing and
mailing and reduced management fees, and that the Reorganization would be
advantageous to and in the best interests of the Shareholders. See "The Proposed
Transactions--Reasons for the Proposed Transactions".
FEE EXAMPLE
The tables below show examples of the total expenses you would pay on a
$10,000 investment over one-, three-, five- and ten-year periods. The examples
are intended to help you compare the cost of investing in Navellier Large Cap
Growth versus Touchstone Large Cap Growth and Touchstone Large Cap Growth (Pro
Forma), assuming the Reorganization takes place. The examples assume a 5%
average annual return, that you redeem all of your shares at the end of each
time period and that you reinvest all of your dividends. The following tables
also assume that total annual operating expenses remain the same throughout all
periods, and for Touchstone Large Cap Growth, are limited for the first two
years following consummation of the Reorganization and thereafter, are not
limited. The examples are for illustration only, and your actual costs may be
higher or lower.
1 Year 3 Years 5 Years 10 Years
Touchstone Large Cap Growth Fund
$143 $443 $766 $1,680
Navellier Performance Large Cap
Growth Fund $152 $624 $1,123 $2,497
Pro Forma Combined $132 $454 $800 $1,773
PERFORMANCE
The following charts show how the shares of Navellier Performance Large Cap
Growth and the shares of Touchstone Large Cap Growth have performed in the past.
Past performance is not an indication of future results.
YEAR-BY-YEAR TOTAL RETURN
The charts below show the percentage gain or loss for the shares of
Navellier Large Cap Growth and Touchstone Large Cap Growth in each full calendar
year since the inception of each Portfolio on December 19, 1997 and August 2,
1993, respectively. The charts should give you a general idea of the risks of
investing in the Portfolios by showing how a portfolio's return has varied from
year-to-year. The charts include the effects of Portfolio expenses. Total return
amounts are based on the inception date of the Portfolio which may have occurred
before your investment began; accordingly, your investment results may differ.
The Portfolios can also experience short-term performance swings as indicated in
the high and low quarter information at the bottom of each chart.
Navellier Performance Large Cap Growth
1998 1999 2000 2001 2002
41.17% 63.03% -7.66% -23.47% -26.70%
Highest Quarter: 4th Quarter 1999, up 40.00%
Lowest Quarter: 1st Quarter 2001, down 27.98%
The year-to-date return for the Navellier Performance Large Cap Growth Fund's
Class A shares as of June 30, 2003 is 16.16%.
Touchstone Large Cap Growth
1994 1995 1996 1997 1998 1999 2000 2001 2002
-1.67% 32.07% 14.25% 29.34% 21.90% 18.53% -19.50% -23.20% -36.16%
Highest Quarter: 4th Quarter 1998, up 20.28%
Lowest Quarter: 1st Quarter 2001, down 22.72%
The year-to-date return for the Touchstone Large Cap Growth Fund's Class A
shares as of June 30, 2003 is 10.68%.
The following table shows the after-tax returns calculated using the highest
historical individual federal marginal income tax rates and do not reflect the
impact of state and local taxes. Actual after-tax returns depend on an
investor's tax situation and may differ from those shown. The loss (if any) in
the "Return after taxes on distributions and sale of fund shares" column above
may be less than that shown in the "Return after taxes on distributions only"
column because it is assumed that the shareholder is subject to the highest
federal marginal tax rates. The after-tax returns shown are not relevant to
investors who hold their fund shares through tax-deferred arrangements such as
401(k) plans or individual retirement accounts. The index's returns reflect no
deduction for fees, expenses, or taxes. The Fund's past performance, before and
after taxes, is not necessarily an indication of how the Fund will perform in
the future.
Return after
Return after taxes on
taxes on distributions
Return Distributions and sale of Russell 1000
before taxes only fund shares Growth Index
NAVELLIER LARGE CAP
GROWTH PORTFOLIO
One Year -26.70% -26.70% -16.13% -27.89%
Five Year 3.58% 3.56% 2.90% -3.84%
Since Inception 4.07% 4.05% 3.31% *-3.24%
TOUCHSTONE LARGE CAP
GROWTH FUND
One Year -36.16% -39.84% -24.46% -27.89%
Five Year -10.63% -12.39% -8.11% -3.84%
Since Inception 0.97% -0.50% 0.57% **7.62%
* Date of Index performance is from 12/19/1997.
** Date of Index performance is from 08/01/1993.
The next table lists the average annual total return of the shares of the
Portfolio and of Touchstone Large Cap Growth for the past one and five years and
since inception (through December 31, 2002). This table includes the effects of
Portfolio expenses and is intended to provide you with some indication of the
risks of investing in each by comparing its performance with an appropriate
widely recognized index of securities, a description of which can be found
following the tables. An index does not reflect fees or expenses. It is not
possible to invest directly in an index.
Average Annual Total Return (for the period ended 12/31/2002)(1)
1 Year 5 Years 10 Years From
Ended Ended Ended Inception
12/31/02 12/31/02 12/31/02 to 12/31/02
Navellier Large Cap Growth 4.07%
Portfolio -26.70% 3.58% -- 12/19/97
Touchstone Large Cap 0.97%
Growth Fund -36.16% -10.63% -- 8/2/1993
S&P 500 Index *-0.59%
-22.10% -0.59% 9.34% **9.38%
Russell 1000 Growth Index -27.89% -3.84% 6.71% ***-3.24%
** 9.62%
(1) Reflects waiver of advisory fees and reimbursements and/or waivers of
expenses for certain periods. Without such reimbursements and/or waivers, the
average annual total returns during the periods would have been lower.
* Date of Index performance is from 01/01/1998.
** Date of Index performance is from 08/01/1993.
*** Date of Index performance is from 12/19/1997.
The S&P 500 Index is a widely recognized unmanaged index that measures the
stock performance of 500 large- and medium-sized companies and is often used to
indicate the performance of the overall stock market.
The Russell 1000 Growth Index is a widely recognized unmanaged index that
measures the stock performance of the Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values.
For a detailed discussion of the manner of calculating total return, please
see the Portfolios' Statements of Additional Information. Generally, the
calculations of total return assume the reinvestment of all dividends and
capital gain distributions on the reinvestment date and the deduction of all
recurring expenses that were charged to shareholders' accounts.
Important information about Touchstone Large Cap Growth is also contained
in management's discussion of Touchstone Large Cap Growth's performance. This
information also appears in the most recent Annual Report of the Trust relating
to Touchstone Large Cap Growth.
Upon consummation of the Reorganization, Touchstone Large Cap Growth will
assume and publish the performance history of Navellier Performance Large Cap
Growth.
PURCHASES AND EXCHANGES
Acquiring Fund Shares are sold in a continuous offering and are offered to
the public, and may be purchased through securities dealers or directly from the
Acquiring Fund's underwriter, Touchstone Securities, Inc., at the net asset
value next computed after the receipt of a purchase order. A one time 5.75%
sales charge is imposed by the Acquiring Fund on purchases of Acquiring Fund
Class 'A' Shares; however, Navellier Performance Large Cap Growth shareholders
as of the consummation of the Reorganization may continue to purchase Class 'A'
shares without a sales charge for as long as an open account with a share
balance is maintained in the Acquiring Fund. The Acquiring Fund charges an
annual 0.25% 12b-1 fee and securities dealers may charge a processing fee for
orders transmitted by such dealers to the Acquiring Fund. The Portfolio charges
an annual 0.25% 12b-1 fee.
The Acquiring Fund currently offers an exchange privilege, including
telephone exchange privileges, which, subject to certain restrictions, permit
shares of any of the other portfolios of the Touchstone Strategic Trust to be
exchanged for shares of the Acquiring Fund. These exchanges are based upon each
portfolio's net asset value per share next computed following receipt of a
properly-executed exchange request without any sales charge. These exchanges
also may be made only between identically-registered accounts, and these
exchange privileges also are available only in states where the shares to be
acquired may be legally sold. If the proposed merger does not occur, Portfolio
shareholders will not be able to exchange their Portfolio shares for shares of
any series of the Touchstone Strategic Trust. Except for the foregoing, there
would be no material differences between the exchange privileges which
shareholders of the Portfolio currently have and the exchange privileges which
such shareholders will have as shareholders of the Acquiring Fund upon
effectiveness of the Reorganization.
The Acquiring Fund has reserved the right to reject or refuse, at Acquiring
Fund's discretion, any order for the purchase of its shares in whole or in part.
REDEMPTION PROCEDURES AND FEES
Acquiring Fund Shares may be redeemed at a redemption price equal to the
net asset value of the shares as next computed following the receipt of a
request for redemption in proper form. Payment of redemption proceeds for
redeemed Acquiring Fund Shares ordinarily are made within seven days after
receipt of a redemption request in proper form and documentation. Shares of the
Acquiring Fund may be redeemed without charge.
DIVIDENDS AND DISTRIBUTIONS; AUTOMATIC REINVESTMENT
The Acquiring Fund and the Portfolio each declares and pays dividends from
the net investment income and short-term capital gains, if any, to shareholders.
The Portfolio pays dividends annually during December of each year and
distributes long-term capital gains, if any, to shareholders on an annual basis
in December. The Acquiring Fund pays dividends quarterly and pays capital gains,
if any, at least annually.
The income dividends and capital gains distributions for investors in the
Acquiring Fund and in the Portfolio are each automatically reinvested, without
sales charge, in additional shares of the Acquiring Fund and of the Portfolio
respectively at the applicable net asset value of such shares calculated on the
ex-dividend date unless such an investor has requested otherwise in writing.
FEDERAL TAX CONSEQUENCES OF THE PROPOSED REORGANIZATION
The Acquiring Fund and the Portfolio have received, as a condition to the
Reorganization, opinions of legal counsel, to the effect, for Federal income tax
purposes, that the proposed Reorganization will constitute a tax-free
reorganization within the meaning of Section 368(a)(1)(C) of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"). Accordingly, it is believed that
no gain or loss generally will be recognized by Touchstone Strategic Trust or by
the Acquiring Fund, by the Navellier Performance Funds or by the Portfolio, or
by their respective shareholders (see "The Proposed Transactions--Federal Income
Tax Consequences").
COSTS AND EXPENSES OF THE REORGANIZATION
Navellier Management, Inc. will pay the costs, expenses, and professional
fees incurred in the preparation and mailing of this notice and this combined
prospectus/proxy statement and the proxy, and in the solicitation of proxies,
which may include reimbursement to broker-dealers and others who forward proxy
materials to their clients and the costs of a professional solicitation firm.
See "Introduction and Voting Information--Proxy Solicitation".
CONTINUATION OF SHAREHOLDER ACCOUNTS; SHARE CERTIFICATES
As a result of the proposed transactions contemplated by the Reorganization
of the Portfolio into the Acquiring Fund, Shareholders would cease to be
shareholders of the Portfolio and would receive on the books of the Acquiring
Fund, that number of full and fractional Acquiring Fund Shares having an
aggregate net asset value equal to the aggregate net asset value of his or her
Portfolio Shares as of the close of business on the Closing Date.
The Acquiring Fund will establish accounts on the Closing Date for
Shareholders which will contain the appropriate number of Acquiring Fund Shares.
Acceptance of Acquiring Fund Shares by a Shareholder will be deemed to be
authorization of the Acquiring Fund and its agents to establish, with respect to
the Acquiring Fund, all of the account options, including telephone redemptions,
if any, and dividend and distribution options, as have been established for the
Shareholder's Portfolio account. Shareholders who are receiving payments under
an Automatic Investment Plan, with respect to Portfolio Shares, will retain the
same rights and privileges as to Acquiring Fund Shares under such an Automatic
Investment Plan after the Reorganization. Similarly, no further action will be
necessary in order to continue, with respect to Acquiring Fund Shares, any
retirement plan currently maintained by a Shareholder with respect to Portfolio
Shares.
As a series of a Massachusetts business trust, the Acquiring Fund will not
issue certificates evidencing ownership of Acquiring Fund Shares. Shareholders
of Portfolio will have their beneficial interests in Portfolio cancelled on the
books of Portfolio in order to receive Acquiring Fund Shares on the books of
Acquiring Fund as a result of the Reorganization.
No sales or other charges will be imposed in connection with the issuance
of Acquiring Fund Shares to Portfolio Shareholders pursuant to the
Reorganization.
FORM OF ORGANIZATION OF TOUCHSTONE STRATEGIC TRUST
Touchstone Strategic Trust is an unincorporated voluntary association
organized under the laws of the State of Massachusetts as a business trust
pursuant to the Declaration of Trust. The operations of Touchstone Strategic
Trust and the Acquiring Fund (a Portfolio of Touchstone Strategic Trust) are
governed by this Declaration of Trust, by Touchstone Strategic Trust's By-Laws,
and by Massachusetts Law, as applicable. The Navellier Performance Funds is an
unincorporated voluntary association organized under the laws of the State of
Delaware as a business trust. The operations of The Navellier Performance Funds
and the Portfolio are governed by The Navellier Performance Funds' Declaration
of Trust dated October 17, 1995, and by Delaware law, as applicable. Both
Touchstone Strategic Trust and The Navellier Performance Funds, as well as their
series investment portfolios, are subject to the provisions of the 1940 Act and
to the rules and regulations of the Commission thereunder. Touchstone Strategic
Trust is authorized to issue an unlimited number of shares of beneficial
interest in one or more series investment portfolios or funds. Currently,
Touchstone Strategic Trust is composed of six (6) separate investment
portfolios: the Emerging Growth Fund, the Growth Opportunities Fund, the Large
Cap Growth Fund, the Enhanced 30 Fund, the Value Plus Fund, and the Small Cap
Growth Fund ("the Portfolios"). See "The Proposed Transactions--Description of
Securities to Be Issued".
PRINCIPAL RISK FACTORS
The principal risks associated with an investment in the Acquiring Fund
after the consummation of the Reorganization are discussed below. These risks
are identical to the risks of investing in the Portfolio.
An investment in shares of the Acquiring Fund involves certain speculative
considerations. There can be no assurance that any of the Acquiring Fund's
objectives will be achieved or that the value of the investment will increase.
An investment in shares of the Portfolio also involves the same risks.
MARKET RISK
A fund's share price can fall because of weakness in the broad market, a
particular industry, or specific holdings. The market as a whole can decline for
many reasons, including disappointing corporate earnings, adverse political or
economic developments here or abroad, changes in investor psychology, or heavy
institutional selling. The prospects for an industry or a company may
deteriorate. In addition, an assessment by a fund's investment adviser of
particular companies may prove incorrect, resulting in losses or poor
performance by those holdings, even in a rising market. The Acquiring Fund could
miss attractive investment opportunities if its investment adviser underweights
fixed income markets or industries where there are significant returns, and
could lose value if the investment adviser overweights fixed income markets or
industries where there are significant declines.
MARKET CAPITALIZATION RISK
Stocks fall into three broad market capitalization categories--large,
medium and small. Investing primarily in one category carries the risk that due
to current market conditions that category may be out of favor. If valuations of
large capitalization companies appear to be greatly out of proportion to the
valuations of small or medium capitalization companies, investors may migrate to
the stocks of small and mid-sized companies causing a fund that invests in these
companies to increase in value more rapidly than a fund that invests in larger,
fully-valued companies. Larger, more established companies may also be unable to
respond quickly to new competitive challenges such as changes in technology and
consumer tastes. Many larger companies also may not be able to attain the high
growth rate of successful smaller companies, especially during extended periods
of economic expansion.
INVESTING IN SECURITIES OF FOREIGN ISSUERS
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investing in domestic issuers. These considerations include, among others,
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information, the
difficulty of interpreting financial information prepared under laws applicable
to foreign securities markets, the impact of political, social, or diplomatic
developments, difficulties in invoking legal process abroad, and the difficulty
of assessing economic trends in foreign countries. Navellier Management, Inc.
will use the same basic selection criteria for investing in foreign securities
as it uses in selecting domestic securities.
While, to some extent, the risks to the Acquiring Fund of investing in
foreign securities may be limited, since it may not invest more than 25% of its
net asset value in such securities and since it may only invest in foreign
securities which are traded in the United States securities markets, the risks
nonetheless exist. The same risks apply to the Portfolio's investments in
foreign securities.
PORTFOLIO TURNOVER
While the future annual rate of portfolio turnover is unknown, Navellier
Management, Inc. estimates but cannot guarantee that the annual portfolio
turnover rate will not exceed 200%. Navellier Management, Inc., which is also
the investment advisor to the Portfolio, will employ the same investment style
for the Acquiring Fund as it employed in managing the Portfolio, which had an
annual portfolio turnover rate in 2002 of 115%. However, these are NOT
restrictions on Navellier Management, Inc. and if, in Navellier Management
Inc.'s judgment, a higher annual portfolio turnover rate is required in order to
attempt to achieve a higher overall performance, then Navellier Management, Inc.
is permitted to do so. However, high portfolio turnover (100% or more) will
result in increased brokerage commissions, dealer mark-ups, and other
transaction costs on the sale of securities and on reinvestment in other
securities and could therefore adversely affect performance.
NON-DIVERSIFICATION RISK
The Acquiring Fund is a non-diversified investment companies (assuming the
approval of the shareholders of the Acquiring Fund to change the Fund to a
non-diversified fund upon completion of the Reorganization) and as such, may
invest up to 25% of its assets in a single issuer and up to 50% of its assets
may consist of securities of only two issuers. A higher percentage of
investments among fewer issuers may result in greater fluctuation in the total
market value of the Fund's investments than in the investments of a Fund which
invests in numerous issuers.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
As discussed below, the investment objective and policies of the Acquiring
Fund and the Portfolio will be the same (subject to the approval of the
shareholders of Touchstone Large Cap Growth to change the Fund to a
non-diversified fund upon completion of the Reorganization). The Comparison of
Investment Objectives and Policies has been prepared assuming such change takes
place.
INVESTMENT OBJECTIVE AND POLICIES
GENERAL. The Acquiring Fund and the Portfolio each invest in the common
stocks of large cap companies (companies with market capitalization of more than
$5 Billion).
INVESTMENT OBJECTIVE OF THE ACQUIRING FUND
The Investment Objective of the Acquiring Fund is and will be to achieve
long-term growth of capital. The Acquiring Fund invests in securities traded in
the United States securities markets of domestic issuers and of foreign issuers.
After the Reorganization, the sole objective of the Acquiring Fund is to seek to
achieve long term growth of capital primarily through investments in securities
of large cap companies (companies with market capitalization of more than $5
Billion) with appreciation potential by applying the proprietary modern
portfolio theory techniques of Navellier Management, Inc. There can be no
assurance that the Acquiring Fund will achieve its investment objectives. The
Acquiring Fund's investment objectives may be changed without shareholder
approval subject to 60 days notice to shareholders. The Acquiring Fund should
not be considered suitable for investors seeking current income.
INVESTMENT OBJECTIVE OF THE PORTFOLIO
The investment objective of the Portfolio is the same as the investment
objective of the Acquiring Fund. The Portfolio's investment objective is to
achieve long-term growth of capital primarily through investment in large cap
companies with appreciation potential. The Portfolio invests in securities
traded in the United States securities markets of domestic issuers and of
foreign issuers. The sole objective of the Portfolio is to seek to achieve long
term growth of capital primarily through investments in securities of large cap
companies (companies with market capitalization of more than $5 Billion) with
appreciation potential. There can be no assurance that the Portfolio will
achieve its investment objectives. The Portfolio's investment objectives may not
be changed without shareholder approval. The Portfolio should not be considered
suitable for investors seeking current income.
OTHER INVESTMENTS. Both the Acquiring Fund and the Portfolio may, for
temporary defensive purposes or to maintain cash or cash equivalents to meet
anticipated redemptions, also invest in debt securities and money market funds
if, in the opinion of the investment advisor, such investment will further their
cash needs or temporary defensive needs. In addition, when the investment
advisor feels that market or other conditions warrant it, for temporary
defensive purposes, both the Acquiring Fund and the Portfolio may retain cash or
invest all or any portion of their assets in cash equivalents, including money
market mutual funds. Under normal conditions, both the Acquiring Fund's and
Portfolio's holdings in such non-equity securities should not exceed 20% of the
total assets of such fund.
CERTAIN INVESTMENT RESTRICTIONS AND LIMITATIONS
The investment restrictions and limitations of Acquiring Fund and those of
the Portfolio are and will be substantially the same (subject to the approval of
the shareholders of Touchstone Large Cap Growth to change that Fund to a non-
diversified fund upon completion of the Reorganization). Unless otherwise
specified, the investment restrictions and limitations are considered to be
"fundamental" policies, and, as such, may not be changed without approval of the
holders of a "majority" (as that term is defined in the 1940 Act) of Acquiring
Fund's or Portfolio's respective outstanding shares.
The Portfolio may not:
1. Purchase securities of any issuer, other than obligations
issued or guaranteed as to principal and interest by the United States
government or its agencies or instrumentalities, if immediately
thereafter (i) more than 5% of the Portfolio's total assets (taken at
market value) would be invested in the securities of such issuer, or
(ii) more than 10% of the voting securities of any class of such
issuer would be held by the Portfolio.
2. Concentrate the Portfolio investments in any one industry. To
comply with this restriction, no security may be purchased for the
Portfolio if such purchase would cause the value of the aggregate
investment of the Portfolio in any one industry to be 25% or more of
the Portfolio's total assets (taken at market value).
3. Purchase any securities or other property on margin, or engage
in short sales of securities (unless it owns, or by virtue of its
ownership of other securities has the right to obtain without payment
of any additional consideration securities equivalent in kind and
amount to the securities sold); PROVIDED, HOWEVER, that the Portfolio
may obtain short-term credit as may be necessary for the clearance of
purchases and sales of securities.
4. Make cash loans, except that the Portfolio may purchase bonds,
notes, debentures, or similar obligations which are customarily
purchased by institutional investors whether publicly distributed or
not.
5. Make securities loans, except that the Portfolio may make
loans of the securities of the Portfolio, provided that the market
value of the securities subject to any such loans does not exceed 33
1/3% of the value of the total assets (taken at market value) of the
Portfolio.
6. Make investments in real estate or commodities or commodity
contracts, including futures contracts, although the Portfolio may
purchase securities of issuers which deal in real estate or
commodities even though this is not a primary objective of the
Portfolio but only if such securities are large cap equity securities
or constitute less than 20% of the Portfolio's total assets.
7. Invest in oil, gas, or other mineral exploration or
development programs, although the Portfolio may purchase securities
of issuers which engage in whole or in part of such activities, but
only if such
securities are large cap equity securities or constitute less than 20%
of the Portfolio's total assets.
8. Invest in or sell puts, calls, straddles, and any combination
thereof.
9. Purchase securities of companies for the purpose of exercising
management or control.
10. Participate in a joint or joint and several trading account
in securities.
11. Purchase the securities of (i) other open-end investment
companies, or (ii) closed-end investment companies.
12. Issue senior securities or borrow money, except that
Portfolio may (i) borrow money only from banks for temporary or
emergency (not leveraging) purposes, including the meeting of
redemption requests, that might otherwise require the untimely
disposition of securities, provided that any such borrowing does not
exceed 10% of the value of the total assets (taken at market value) of
the Portfolio, and (ii) borrow money only from banks for investment
purposes, provided that (a) after each such borrowing, when added to
any borrowing described in clause (i) of this paragraph, there is an
asset coverage of at least 300% as defined in the Investment Company
Act of 1940, and (b) is subject to an agreement by the lender that any
recourse is limited to the assets of the Portfolio with respect to
which the borrowing has been made. The Portfolio may not invest in
securities while the amount of its borrowing exceeds 5% of its total
assets.
13. Pledge, mortgage, or hypothecate its assets to an extent
greater than 10% of its total assets to secure borrowings made
pursuant to the provisions of Item 12 above.
The following investment restrictions are "fundamental policies" of the
Acquiring Fund and may not be changed with respect to the Acquiring Fund without
the approval of a "majority of the outstanding voting securities" of the
Acquiring Fund. "Majority of the outstanding voting securities" under the 1940
Act, and as used in the Statement of Additional Information and the Prospectus,
means, the lesser of (i) 67% or more of the outstanding voting securities of a
Fund present at a meeting if the holders of more than 50% of the outstanding
voting securities of a Fund are present or represented by proxy or (ii) more
than 50% of the outstanding voting securities of the Acquiring Fund.
THE FUNDAMENTAL LIMITATIONS APPLICABLE TO THE ACQUIRIING FUND ARE:
1. BORROWING MONEY. The Acquiring Fund may not engage in borrowing
except as permitted by the Investment Company Act of 1940, any rule,
regulation or order under the 1940 Act or any SEC staff interpretation
of the 1940 ACT.
2. UNDERWRITING. The Acquiring Fund may not underwrite securities
issued by other persons, except to the extent that, in connection with
the sale or disposition of portfolio securities, the Acquiring Fund
may be deemed to be an underwriter under certain federal securities
laws or in connection with investments in other investment companies.
3. LOANS. The Acquiring Fund may not make loans to other persons
except that the Acquiring Fund may (1) engage in repurchase
agreements, (2) lend portfolio securities, (3) purchase debt
securities, (4) purchase commercial paper, and (5) enter into any
other lending arrangement permitted by the Investment Company Act of
1940, any rule, regulation or order under the Act or any SEC staff
interpretation of the Act.
4. REAL ESTATE. The Acquiring Fund may not purchase or sell real
estate except that the Acquiring Fund may (1) hold and sell real
estate acquired as a result of the Acquiring Fund's ownership of
securities or other instruments (2) purchase or sell securities or
other instruments backed by real estate or interests in real estate
and (3) purchase or sell securities or entities or investment
vehicles, including real estate investment trusts that invest, deal or
otherwise engage in transactions in real estate or interests in real
estate.
5. COMMODITIES. The Acquiring Fund will not purchase or sell physical
commodities except that the Acquiring Fund may (1) hold and sell
physical commodities acquired as a result of the Acquiring Fund's
ownership of securities or other instruments, (2) purchase or sell
securities or other instruments backed by physical commodities, (3)
purchase or sell options, and (4) purchase or sell futures contracts.
6. CONCENTRATION OF INVESTMENTS. The Acquiring Fund may not purchase
the securities of an issuer (other than securities issued or
guaranteed by the United States Government, its agencies or its
instrumentalities) if, as a result, more than 25% of the Acquiring
Fund's total assets would be invested in the securities of companies
whose principal business activities are in the same industry.
7. SENIOR SECURITIES. The Acquiring Fund my not issue senior
securities except as permitted by the Investment Company Act of 1940,
any rule, regulation or order under the Act or any SEC staff
interpretation of the Act.
THE PROPOSED TRANSACTIONS
PROPOSED AGREEMENT AND PLAN OF REORGANIZATION
The terms and conditions of the proposed merger, as contemplated by the
Reorganization, are set forth in the Plan. Significant provisions of the Plan,
with respect to the proposed Reorganization of the Portfolio into the Acquiring
Fund, are summarized immediately below. This summary, however, is qualified in
its entirety by reference to the Plan, a form of which is attached to this
combined prospectus/ proxy statement as Appendix A.
With respect to the proposed Reorganization, the Plan contemplates (i) the
Acquiring Fund, on the closing date of the Reorganization, acquiring all of the
assets of the Portfolio and all the assets of the Millennium Portfolio in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of
all valid liabilities of the Portfolio and of the Millennium Portfolio and (ii)
the constructive distribution of Acquiring Fund Shares to the Shareholders of
the Portfolio and to the shareholders of the Millennium Portfolio in exchange
for the Portfolio Shares and the Millennium Portfolio Shares of such
Shareholders, all as provided for by the Plan.
The assets of the Portfolio and the assets of the Millennium Portfolio to
be acquired by the Acquiring Fund include all property, including without
limitation, all cash, securities, commodities and futures interests and
dividends or interest receivables which are owned by the Portfolio and those
owned by the Millennium Portfolio and any deferred or prepaid expenses shown as
an asset on the books of the Portfolio and on the books of the Millennium
Portfolio on the closing date of the Reorganization. The Acquiring Fund will
assume from the Portfolio and from the Millennium Portfolio all valid
liabilities, expenses, costs, charges and reserves reflected on unaudited
statements of assets and liabilities of the Portfolio and of the Millennium
Portfolio. The Acquiring Fund also will deliver Acquiring Fund Shares to the
Portfolio and to the Millennium Portfolio, which Acquiring Fund Shares the
Portfolio and the Millennium Portfolio shall then distribute to their respective
Shareholders in exchange for such Shareholders' Portfolio Shares or Millennium
Portfolio Shares. The exchange of the Portfolio's assets and the Millennium
Portfolio's assets for the Acquiring Fund Shares is anticipated to occur on
September 19, 2003, or such later date as the parties may agree upon (the
"Closing Date").
The value of the Portfolio's assets and the Millennium Portfolio's assets
to be acquired by the Acquiring Fund and the value of the Portfolio's valid
liabilities and the Millennium Portfolio's valid liabilities to be assumed by
the Acquiring Fund and the net asset value of a share of the Acquiring Fund will
be determined as of immediately after the close of regular trading on the NYSE
on the Closing Date, using the valuation procedures set forth in the Acquiring
Fund's then-current Prospectus and Statement of Additional Information.
Upon the Closing Date, the Portfolio and the Millennium Portfolio will
liquidate and distribute pro rata to their Shareholders of record (as evidenced
by such Shareholders' Portfolio and Millennium Portfolio Shares) the Acquiring
Fund Shares received by the Portfolio and the Millennium Portfolio in exchange
for such Shareholders' interests in the Portfolio and the Millennium Portfolio.
These liquidations and distributions will be accomplished by opening accounts on
the books of the Acquiring Fund in the name of each shareholder of record in the
Portfolio and in the Millennium Portfolio and by crediting thereon the shares
previously credited to the Portfolio and to the Millennium Portfolio account of
the shareholder on those books, as described above (see "Synopsis--Continuation
of Shareholder Accounts; Share Certificates"). Each such Acquiring Fund
shareholder account shall represent the respective pro-rata number of the
Acquiring Fund Shares due to such Shareholder.
Accordingly, every Shareholder will own Acquiring Fund Shares immediately
after the Reorganization, the total value of which Acquiring Fund Shares will be
equal to the total value of his or her Portfolio Shares or Millennium Portfolio
Shares immediately prior to the Reorganization. Moreover,
because the Acquiring Fund Shares will be issued at net asset value in exchange
for the net assets transferred from the Portfolio or from the Millennium
Portfolio, the total net asset value of the Acquiring Fund Shares received by
Portfolio Shareholders or Millennium Portfolio Shareholders after the transfer
of assets will be equal to the net asset value of the Portfolio Shares or
Millennium Portfolio Shares at the Closing Date. Thus, the Reorganization will
not result in a dilution in value of any Shareholder account.
The consummation of the proposed transaction contemplated by the
Reorganization is subject to a number of conditions set forth in the Plan, some
of which conditions may be waived by the Touchstone Strategic Trust Board or by
the Performance Funds Board, or by an authorized officer of the Touchstone
Strategic Trust or The Navellier Performance Funds, as appropriate. Among the
significant conditions (which may not be waived) for the Reorganization are: (i)
the receipt by the Portfolio and by the Millennium Portfolio and by the
Acquiring Fund of an opinion of counsel as to certain Federal income tax aspects
of the Reorganization (see "The Proposed Transactions--Federal Income Tax
Consequences") (which opinion of counsel has already been received); (ii) the
approval of the Plan by the affirmative vote of the holders of at least 67% of
the Portfolio shares and of the Millennium Portfolio Shares present in person or
by proxy entitled to vote at the Portfolio shareholders' meeting and at the
Millennium Portfolio Shareholder's meeting if a quorum is present or a majority
of the Portfolio's and of the Millennium Portfolio's outstanding voting shares,
whichever percentage is less and (iii) approval of the Plan by the Portfolio's
Board of Trustees and by the Millennium Portfolio's Board of Trustees (which
approvals have also already been obtained). The Plan may be terminated and the
Reorganization abandoned at any time, before or after approval by the
Shareholders, prior to the applicable Closing Date or by mutual consent of the
Portfolio or the Millennium Portfolio and the Acquiring Fund. In addition, the
Plan may be amended in any mutually-agreeable manner, except that no amendment
may be made to the Plan subsequent to the Meeting that would be materially
detrimental to the Shareholders.
In addition, approval by the shareholders of the Acquiring Fund of the
change of that Fund from a diversified to a non-diversifed series of the Trust
is a condition precedent to the consummation of the Reorganization.
The Investment Sub-Advisor to the Acquiring Fund (Navellier Management,
Inc.) contemplates that the Portfolio's and the Millennium Portfolio's assets at
the date of the transactions of the Reorganization will be invested in a manner
consistent with the investment objectives and policies of both the Portfolio and
the Millennium Portfolio and the Acquiring Fund.
REASONS FOR THE PROPOSED TRANSACTIONS
As described below in greater detail, the Portfolio's Trustees and the
Millennium Portfolio's Trustees believe the Reorganization would benefit
Shareholders of the Portfolio and of the Millennium Portfolio by substantially
reducing existing operating costs and expenses of the Portfolio and of the
Millennium Portfolio by an estimated $50,000 per year or more thereby promoting
more efficient operations. It is estimated that a proposed merger of the
Portfolio and of the Millennium Portfolio into the Acquiring Fund would
substantially reduce the annual operating expenses of the Portfolio and of the
Millennium Portfolio by reducing the Portfolio's and the Millennium Portfolio's
annual Independent Trustee's fees, expenses, independent counsel's fees and; by
reducing liability insurance, costs of printing separate prospectuses, annual
and semi-annual shareholder reports, quarterly reports and mailings for the
Portfolio and for the Millennium Portfolio; by reducing the management fee
charged by the Investment Advisor; and that a proposed merger would generally
increase the efficiency of operations and would not result in any change in the
way the assets were managed, since the Investment Sub-Advisor, Navellier
Management, Inc., would remain the same and would operate pursuant to the same
investment objectives and restrictions. For these reasons, the Trustees believe
that the Reorganization of the Portfolio and of the Millennium Portfolio into
the Acquiring Fund is in the best interests of the Shareholders of the Portfolio
and of the Millennium Portfolio and that the interests of the Shareholders of
the Portfolio and of the Millennium Portfolio would not be diluted by the
Reorganization.
The Portfolio Trustees and the Millennium Portfolio Trustees recommend that
the Shareholders of the Portfolio and of the Millennium Portfolio vote FOR
Proposal 1 (the Reorganization) based on a number of factors, first and foremost
of which is that the Reorganization should result in substantial savings. The
Portfolio Trustees and the Millennium Portfolio Trustees also believe that the
Reorganization, if effected, would enable the resulting larger fund complex,
with its larger asset base, to achieve enhanced distribution capability. It is
also believed that the anticipated reduction in costs should increase the
performance of the Portfolio and of the Millennium Portfolio.
It is estimated that the proposed merger should permit the reduction or
elimination of certain costs and expenses presently incurred for services that
are separately performed for the Portfolio, the Millennium Portfolio and the
Acquiring Fund. For example, the projected Independent Trustees fees and
expenses expected to be paid to the Independent Trustees of the Portfolio and of
the Millennium Portfolio would be reduced, as would the liability insurance and
the attorney's fees and costs of outside counsel for the Independent Trustees.
These costs should be eliminated or greatly reduced. Printing and mailing costs
should be reduced as a result of a single prospectus, annual report, and
semi-annual report. As a general rule, economies can be expected to be realized
primarily with respect to fixed expenses, such as costs of printing and fees for
professional services. Expenses that are based on the value of assets or the
number of shareholder accounts, such as custody and transfer agent fees,
however, would be largely unaffected by the Reorganization. Achievement of these
goals, of course, cannot be assured.
The Portfolio Trustees and the Millennium Portfolio Trustees recommend the
proposed Reorganization, and the transactions contemplated thereby, to the
Shareholders for the reasons set forth above as well as on a number of other
factors, including the following:
1. the terms and conditions of the Reorganization and the fact that the
Reorganization would not result in dilution of Shareholder interests;
2. the fact that the investment objectives, policies, Navellier investment
style and restrictions of the Portfolio, the Millennium Portfolio and the
Acquiring Fund would remain essentially the same;
3. similar service features available to shareholders in the Portfolio, the
Millennium Portfolio and the Acquiring Fund;
4. the anticipated benefits to the Shareholders of the Portfolio and of the
Millennium Portfolio by being part of the Touchstone Investments;
5. the tax-free nature and consequences of the Reorganization;
6. the expense ratios, fees, and expenses of Touchstone Large Cap Growth
including the fact that the investment advisory fee rate paid by Touchstone
Large Cap Growth is lower than that paid by Navellier Large Cap Growth;
7. the fact that the Manager has contractually agreed to limit the total
annual operating of the Acquiring Fund for at least two years and that such
expenses would be lower than the current operating expenses of the
Portfolio;
8. the fact that Navellier Management, Inc. and Touchstone Advisors, Inc. will
bear the expenses incurred by the Portfolio and the Acquiring Fund in
connection with the Reorganization;
The Trustees of the Trust have also approved the Plan on behalf of Touchstone
Large Cap Growth.
YOUR TRUSTEES BELIEVE THE PROPOSED REORGANIZATION PLAN SHOULD BE APPROVED.
The consummation of the proposed transactions contemplated by the Reorganization
is subject to a number of conditions set forth in the Plan, some of which
conditions may be waived by the Trustees. See "The Proposed
Transactions--Agreement and proposed Plan of Reorganization." Among the
significant conditions (which may not be waived) for the Reorganization are (i)
the receipt by each of the Funds of an opinion of counsel (or a revenue ruling
of the U.S. Internal Revenue Service) as to certain Federal income tax aspects
of the Reorganization (see "The Proposed Transactions--Federal Income Tax
Consequences") (that opinion of counsel has been received) and (ii) the approval
of the Plan by the affirmative vote of at least 67% of the Portfolio Shares and
at least 67% of the Millennium Portfolio Shares present in person or by proxy if
a quorum of shareholders is present or the holders of at least a majority of the
outstanding voting Shares of the Portfolio and of the Shares of the Millennium
Portfolio, whichever amount is less and (iii) approval of the proposed merger by
the Trustees of the Portfolio and of the Trustees of the Millennium Portfolio
(these conditions have also been satisfied). The Plan provides, with respect to
the Reorganization, for the acquisition of all the assets of the Portfolio and
all the assets of the Millennium Portfolio by the Acquiring Fund in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of all valid
liabilities of the Portfolio and of the Millennium Portfolio. The Acquiring Fund
Shares received by the Portfolio and the Acquiring Fund shares received by the
Millennium Portfolio then would be distributed pro rata to the Shareholders of
the Portfolio and to the Shareholders of the Millennium Portfolio respectively.
The outstanding Shares of the Portfolio would be cancelled and the Portfolio
would be liquidated. The outstanding Shares of the Millennium Portfolio would be
cancelled and the Millennium Portfolio would be liquidated. The Reorganization
is anticipated to occur on September 19, 2003, or such later date as the parties
may agree upon (the "Closing Date"). As a result of the proposed transactions
contemplated by the Reorganization, each portfolio shareholder would receive a
number of full and fractional shares of the corresponding Acquiring Fund having
a total net asset value equal in value to the net asset value of his or her
Shares in the Portfolio and/or the Millennium Portfolio as of the Closing Date
of the Reorganization.
DESCRIPTION OF SECURITIES TO BE ISSUED
GENERAL. The Acquiring Fund Shares to be issued pursuant to the proposed
Reorganization represent shares of beneficial interest in the Large Cap
Growth Fund of the Touchstone Strategic Trust, which is a diversified, open-end
management investment company. Touchstone Strategic Trust is an unincorporated
voluntary association organized under the laws of the State of Massachusetts as
a business trust, pursuant to Touchstone Strategic Trust's Declaration of Trust,
dated November 18, 1982 (the "Declaration of Trust"). The Declaration of Trust
authorizes Touchstone Strategic Trust to issue an unlimited number of shares of
beneficial interest in one or more series. Currently, Touchstone Strategic Trust
has authorized six series: the International Equity Fund, the Emerging Growth
Fund, the Growth Opportunities Fund, the Large Cap Growth Fund, the Enhanced 30
Fund and the Value Plus Fund. Other series in the Touchstone Strategic Trust,
however, may be added in the future. Each Acquiring Fund Share represents an
equal proportionate interest with each other Acquiring Fund Share and each such
Acquiring Fund Share is entitled to equal voting, dividend, liquidation and
redemption rights. Acquiring Fund Shares entitle their holders to one vote per
full share held and to fractional votes for fractional shares held. The
Acquiring Fund Shares do not have cumulative voting rights, preemptive rights or
subscription rights and are fully paid, nonassessable, redeemable and freely
transferable.
Currently, each shareholder of the Acquiring Fund is permitted to inspect
the records, accounts and books of the Touchstone Strategic Trust for any
legitimate business purpose.
MEETINGS. As a Massachusetts business trust, Touchstone Strategic Trust is
not required to hold an annual shareholders' meeting if the 1940 Act does not
require such a meeting. The Declaration of Trust provides that a special meeting
of Touchstone Strategic Trust shareholders of any series of Touchstone Strategic
Trust may be called by the Trustees of Touchstone Strategic Trust and shall be
called by the Trustees upon the written request of shareholders owning at least
10% of the outstanding shares of a series of the Touchstone Strategic Trust
entitled to vote. Touchstone Strategic Trust will hold special shareholder
meetings as required or deemed desirable by the Board for such purposes as
electing Trustees, changing fundamental policies or approving an investment
advisory or shareholder services agreement. Any Trustee may be removed from
office with or without cause at any time either by written instrument, signed by
at least two-thirds (2/3) of the number of Trustees prior to such removal,
specifying the date upon which such removal shall become effective, or by a vote
of Touchstone Strategic Trust shareholders owning at least two-thirds (2/3) of
the outstanding shares of a series of the Touchstone Strategic Trust. If
requested by shareholders of at least 10% of the outstanding shares of a series
of the Touchstone Strategic Trust, Touchstone Strategic Trust will call a
shareholder meeting for the purpose of voting upon the question of the removal
of a Trustee and will assist in communications with other Touchstone Strategic
Trust shareholders as required by Section 16(c) of the 1940 Act.
SHAREHOLDER LIABILITY. Beneficial owners of a Massachusetts business trust,
such as Touchstone Strategic Trust,may under some circumstances be liable for
obligations of the Fund. Touchstone Strategic Trust's governing instrument, the
Trust Declaration, however, specifically disclaims shareholder liability for
acts or obligations of Touchstone Strategic Trust and provides that Touchstone
Strategic Trust's shareholders shall not be subject to any personal liability
for the acts or obligations of Touchstone Strategic Trust. The Trust Declaration
further provides for indemnification, out of the property of the series of
Touchstone Strategic Trust with respect to which such shareholder's shares are
issued, for all losses and expenses of any shareholder held personally liable
solely by reason of his or her being or having been a shareholder of such series
and not because of his or her acts or omissions or for some other reason. Thus,
the risk of a shareholder of Touchstone Strategic Trust incurring financial loss
on account of shareholder liability is considered remote since such liability is
limited to circumstances in which a disclaimer is inoperative and Touchstone
Strategic Trust would be unable to meet its obligations.
LIABILITY OF TRUSTEES. Under the Declaration of Trust, a Trustee will be
held personally liable only for the Trustee's own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of a Trustee. Under said Declaration of Trust and separate
indemnity agreements, Trustees and officers of Touchstone Strategic Trust
("Trust Officers") will be indemnified for the expenses of litigation against
them unless it is determined that the person did not act in good faith in the
reasonable belief that the person's action was in or not opposed to the best
interest of Touchstone Strategic Trust or if the person's conduct is determined
to constitute willful misfeasance, bad faith, gross negligence or reckless
disregard of that person's duties. Touchstone Strategic Trust also may advance
money for these expenses provided that the Trustee or the Trust Officer
undertakes to repay Touchstone Strategic Trust if that person's conduct later is
determined to preclude indemnification. The Navellier Performance Funds'
Declaration of Trust and separate indemnity agreements currently set forth
comparable provisions.
The foregoing is only a summary of certain characteristics of (i) the
shares of beneficial interest of Touchstone Strategic Trust to be issued
pursuant to the proposed Reorganization, (ii) the operations of Touchstone
Strategic Trust's Declaration of Trust and By-Laws, and (iii) Massachusetts law.
The foregoing is not a complete description of the shares of beneficial interest
of Touchstone Strategic Trust nor of the documents or laws cited. Shareholders
should refer to the provisions of Massachusetts's law directly for a more
thorough description.
FEDERAL INCOME TAX CONSEQUENCES
Touchstone Strategic Trust and The Navellier Performance Funds have
received, as a condition to the Reorganization, an opinion from Sullivan &
Worcester LLC to the effect, for Federal income tax purposes and with respect to
the Reorganization, that:
1. the proposed Reorganization and the transactions contemplated thereby, as
described herein, will constitute a tax-free "reorganization" within the
meaning of Section 368(a)(1)(C) of the Internal Revenue Code (the "Code");
2. no gain or loss generally will be recognized to the Portfolio upon the
transfer of all of the Portfolio's assets to the Acquiring Fund in exchange
solely for Acquiring Fund Shares and the assumption by the Acquiring Fund
of all valid liabilities of the Portfolio and the subsequent distribution
of those Acquiring Fund Shares to the Portfolio's Shareholders of record in
liquidation thereof;
3. no gain or loss will be recognized to the Acquiring Fund upon the receipt
of those Portfolio assets in exchange solely for Acquiring Fund Shares and
the assumption by the Acquiring Fund of those valid Portfolio liabilities;
4. the Acquiring Fund's basis for those Portfolio assets transferred by the
Portfolio to the Acquiring Fund will be the same as the basis thereof in
the Portfolio's hands immediately before the Reorganization and the
Acquiring Fund's holding period for those assets will include the
Portfolio's holding periods therefore;
5. each Shareholder of record will recognize no gain or loss upon the
constructive exchange of all of his or her Portfolio Shares solely for
Acquiring Fund Shares pursuant to the Reorganization;
6. each Shareholder's basis for the Acquiring Fund Shares to be received by
the Shareholder pursuant to the Reorganization will be the same as the
Shareholder's basis in the Portfolio Shares to be constructively
surrendered in exchange therefore; and
7. each such Shareholder's holding period for those Acquiring Fund Shares will
include the period during which the Portfolio Shares to be constructively
surrendered in exchange for Acquiring Fund Shares were held, provided the
Portfolio Shares were held as capital assets by that Shareholder on the
date of the Reorganization.
A revenue ruling of the Internal Revenue Service as to the Reorganization
is not expected to be obtained.
THE FOREGOING IS INTENDED TO BE ONLY A SUMMARY OF THE PRINCIPAL FEDERAL
INCOME TAX CONSEQUENCES OF THE REORGANIZATION AND SHOULD NOT BE CONSIDERED TO BE
TAX ADVICE. THERE CAN BE NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE WILL
CONCUR ON ALL OR ANY OF THE ISSUES DISCUSSED ABOVE. SHAREHOLDERS OF THE
PORTFOLIO ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL,
STATE AND LOCAL TAX CONSEQUENCES WITH RESPECT TO THE FOREGOING MATTERS AND ANY
OTHER CONSIDERATIONS WHICH MAY BE APPLICABLE TO THE SHAREHOLDERS.
PRO FORMA CAPITALIZATION AND RATIOS
The following table shows the capitalization of the Portfolio, the
Millennium Portfolio, , and the Acquiring Fund shares as of December 31, 2002,
and combined in the aggregate on a pro forma basis, as of December 31, 2002
giving effect to the Reorganization:
- ---------------------------------------------------------------------------------------------------------
Touchstone Large
Navellier Navellier Cap Growth
Class A Touchstone Large Millennium Large Performance Combined Pro
Information Growth Cap Cap Growth Large Cap Growth Forma
- ---------------------------------------------------------------------------------------------------------
Net Assets
Class A $33,843,198 $ 355,316 $13,831,464 $48,029,978
Class B 54,017 423,950 477,967
Class C 1,092,490 215,949 1,308,439
Total Net Assets 34,989,705 995,215 13,831,464 49,816,384
- ---------------------------------------------------------------------------------------------------------
Net Asset Value
Per Share
Class A $ 8.05 $ 4.63 $ 12.19 $ 12.19
Class B 7.62 4.56 12.19
Class C 7.59 4.55 12.19
- ---------------------------------------------------------------------------------------------------------
Shares Outstanding
Class A 4,202,127 76,781 1,134,468 3,939,924
Class B 7,090 92,912 39,210
Class C 143,907 47,449 107,337
Total Shares Outstanding 4,353,124 217,142 1,134,468 4,086,471
- ---------------------------------------------------------------------------------------------------------
DISSOLUTION OF THE PORTFOLIOS
If the Plan is approved by the Shareholders of the Portfolio and of the
Millennium Portfolio and the Reorganization is completed, the Portfolio and the
Millennium Portfolio will be dissolved as soon as practicable in accordance with
the provisions of Delaware law and the Plan. See "The Proposed
Transactions--Agreement and Proposed Plan of Reorganization".
NAVELLIER GROUP RECOMMENDATION
The Portfolio Trustees and Millennium Portfolio Trustees have solicited
this shareholder vote to approve the Reorganization and recommend that the
Portfolio Shareholders and Millennium Portfolio Shareholders vote FOR the
Reorganization on the enclosed WHITE proxy card. The Portfolio Trustees and
Millennium Portfolio Trustees, for the reasons mentioned herein (See "Reasons
For Proposed Transactions"), believe the Reorganization of the Portfolio and
Millennium Portfolio into the Acquiring Fund would result in cost savings, would
be in the best interests of the Portfolio Shareholders and Millennium Portfolio
Shareholders and that their interests would not be diluted.
The Portfolio Trustees and Millennium Portfolio Trustees therefore
recommend that the Shareholders of the Portfolio vote FOR Proposal No. 1 (the
proposal to merge the Portfolio and Millennium Portfolio into the Acquiring Fund
and the transactions contemplated thereby).
ADDITIONAL INFORMATION ABOUT
THE ACQUIRING FUND AND THE ACQUIRING FUND SHARES
Additional information about the Acquiring Fund is included in the current
Prospectus of the Touchstone Strategic Trust, dated August 1, 2003. A copy of
that prospectus has been filed with the Commission and is incorporated by
reference herein. A Shareholder of the Portfolio or the Millennium Portfolio
will receive with this combined prospectus/proxy statement, a copy of the
prospectus for Touchstone Strategic Trust. Further information about the
Acquiring Fund is included in the Statement of Additional Information for
Touchstone Strategic Trust, dated August 1, 2003. The Statement of Additional
Information has been filed with the Commission and is incorporated by reference
herein. Copies of that Statement of Additional Information for Touchstone
Strategic Trust may be obtained without charge by contacting Touchstone
Investments toll-free at 1-800-543-0407.
ADDITIONAL INFORMATION ABOUT
THE PORTFOLIO AND THE PORTFOLIO SHARES
Additional information about the Portfolio is included in the current
Prospectus of the Navellier Performance Funds, dated May 1, 2003. A copy of that
prospectus has been filed with the Commission and is incorporated by reference
herein. A Shareholder will receive with this combined prospectus/proxy statement
a copy of the prospectus for The Navellier Performance Funds. Further
information about the Portfolio is included in the Statement of Additional
Information for The Navellier Performance Funds, dated May 1, 2003, which also
has been filed with the Commission and is incorporated by reference herein. A
copy of the Statement of Additional Information for The Navellier Performance
Funds may be obtained without charge by contacting Navellier Management, Inc. at
One East Liberty Street, Third Floor, Reno, Nevada 89501, or by telephoning
Navellier Management, Inc. toll-free at 1-800-887-8671.
ADDITIONAL INFORMATION ABOUT THE MILLENNIUM PORTFOLIO AND THE
MILLENNIUM PORTFOLIO SHARES
Additional information about the Millennium Portfolio is included in the
current Prospectus of the Navellier Millennium Funds, dated May 1, 2003. A copy
of that prospectus has been filed with the Commission and is incorporated by
reference herein. A Shareholder will receive with this combined prospectus/proxy
statement a copy of the prospectus for The Navellier Millennium Funds. Further
information about the Millennium Portfolio is included in the Statement of
Additional Information for The Navellier Millennium Funds, dated May 1, 2003,
which also has been filed with the Commission and is incorporated by reference
herein. A copy of the Statement of Additional Information for The Navellier
Millennium Funds may be obtained without charge by contacting Navellier
Management, Inc. at One East Liberty Street, Third Floor, Reno, Nevada 89501, or
by telephoning Navellier Management, Inc. toll-free at 1-800-887-8671.
MISCELLANEOUS
AVAILABLE INFORMATION
Touchstone Strategic Trust is registered under the 1940 Act and is subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended, and the 1940 Act and, in accordance therewith, files reports, proxy
materials and other information with the Commission. The Navellier Performance
Funds and the Navellier Millennium Funds are registered under the 1940 Act and
are required to file reports under the 1940 Act. Such reports, proxy materials
and other information can be inspected at the Securities and Exchange Commission
at 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material can
also be obtained from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, DC 20539, at prescribed rates.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Acquiring Fund
Shares will be passed upon by Samuel Kornhauser, 155 Jackson Street, Suite 1807,
San Francisco, California 94111.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of the Touchstone Large Cap Growth Fund at March 31,
2003, and for the periods indicated therein, included in the Company's Annual
Report and incorporated by reference herein and in the Registration Statement,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report appearing therein, and are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing. The financial statements of Navellier Large Cap
Portfolio, a series of Navellier Performance Funds, and Navellier Large Cap
Portfolio, a series of Navellier Millennium Funds, at December 31, 2002, and for
the periods indicated therein, included in the (Trusts') Annual Report and
incorporated by reference herein and in the Registration Statement, have been
audited by Tait, Weller & Baker, independent auditors, as set forth in their
report appearing therein, and are incorporated herein by reference in reliance
upon such report given on the authority of such firm as experts in accounting
and auditing. Copies of these financial statements, as included in the SAI, may
be obtained without charge by contacting Touchstone Securities, Inc. at 221 East
Fourth Street, Suite 300, Cincinnati, Ohio 45202, or by telephoning toll-free at
1-800-543-0407, for the Touchstone audited financial statements and by
contacting Navellier Management, Inc., at One East Liberty Street, Third Floor,
Reno, Nevada 89501, or by telephoning Navellier Management, Inc. toll-free at
1-800-887-8671, for the Portfolio and or Millennium Portfolio financial
statements.
PROXY SOLICITATION
Proxies will be solicited by mail and, if necessary to obtain the requisite
representation of Shareholders, your Trustees also may solicit proxies by
telephone, telegraph, facsimile and/or personal interview by representatives of
the Portfolio, Mr. Navellier, Navellier Management, Inc., employees of Navellier
Management, Inc., or their affiliates, and by representatives of any independent
proxy solicitation service retained for the Meeting. Louis Navellier and
Navellier Management, Inc., whose principal location is One East Liberty Street,
Third Floor, Reno, Nevada 89501, will bear the costs of its solicitation,
including the costs such as the preparation and mailing of the notice, the
combined prospectus/proxy statement, and the proxy, and the solicitation of
proxies, including reimbursement to persons who forward proxy materials to their
clients, and the expenses connected with the solicitation of these proxies in
person, by telephone, or by telegraph. Banks, brokers, and other persons holding
Portfolio Shares registered in their names or in the names of their nominees
will be reimbursed for their expenses incurred in sending proxy materials to and
obtaining proxies from the beneficial owners of such Portfolio Shares.
Mr. Navellier, as sole owner of Navellier Management, Inc., has a financial
interest in the outcome of the vote because Navellier Management, Inc. would be
investment sub-advisor to the merged Portfolio, for which it would receive
investment advisory fees.
REVOCATION OF PROXIES
You may revoke your proxy: (i) at any time prior to the proxy's exercise by
written notice to The Navellier Performance Funds, One East Liberty Street,
Third Floor, Reno, Nevada 89501 prior to the Meeting; (ii) by the subsequent
execution and return of another proxy prior to the Meeting; or (iii) by being
present and voting in person at the Meeting and giving oral notice of revocation
to the Chairman of the Meeting.
NO DISSENTERS' RIGHTS OF APPRAISAL
The purpose of the Meeting is to vote on the proposed tax-free
Reorganization of the Portfolio into the Acquiring Fund, as described below in
greater detail. The Portfolio is a separate series of the Navellier Performance
Funds. The Declaration of Trust of the Navellier Performance Funds (the
"Declaration of Trust") does not entitle shareholders to appraisal rights (i.e.,
to demand the fair value of their shares) in the event of a reorganization or
proposed merger. Consequently, the shareholders will be bound by the terms of
the Plan, if the Plan is approved at the Meeting. Any Shareholder, however, may
redeem his or her Portfolio Shares at net asset value prior to the closing date
of the proposed Reorganization.
ADDITIONAL VOTING INFORMATION; VOTING OF PROXIES; ADJOURNMENT PROXY SOLICITATION
Shareholders of record of the Portfolio at the close of business on July
31, 2003 (the "Record Date") will be entitled to vote at the Meeting. Such
holders of shares of beneficial interest in the Portfolio ("Portfolio Shares")
are entitled to one vote for each Portfolio Share held and to fractional votes
for fractional Portfolio Shares held. A quorum for the Portfolio must be present
in person or represented by Proxy for the transaction of business at the
Meeting. The holders of record of one-third of the Portfolio Shares outstanding
at the close of business on that Record Date present in person or represented by
proxy will constitute a quorum for the Meeting of the Shareholders of the
Portfolio. A quorum being present, the approval at the Meeting by the
shareholders of the Portfolio for the proposed Reorganization requires the
affirmative vote of at least 67% of the outstanding shares of the Portfolio
present in person or represented by proxy at the Meeting if more than 50% of the
outstanding shares of the Portfolio are present in person or represented by
proxy or more than 50% of the outstanding shares entitled to vote, whichever is
less. Shares represented by proxies that reflect abstentions or broker non-votes
will be counted as shares that are present for purposes of determining the
presence of a quorum, but will not be included in the amount of shares voting in
favor of the proposal.
If either (i) a quorum is not present at the Meeting or (ii) a quorum is
present but sufficient votes in favor of a matter proposed at the Meeting (a
"Proposal"), as set forth in the Notice of this Meeting, are not received by
August 22, 2003September 19, 2003, or a date shortly thereafter, then the
persons named as attorneys and proxies in the enclosed proxy ("Proxies") may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of at least
one-third of the shares present in person or by proxy. The persons named as
Proxies will vote those proxies that such persons are required to vote FOR such
Proposal in favor of such an adjournment and will vote those proxies required to
be voted AGAINST such Proposal against such an adjournment. A Shareholder vote
may be taken on a Proposal in this combined prospectus/proxy statement prior to
any such adjournment if sufficient votes have been received and it is otherwise
appropriate.
The individuals named as Proxies on the enclosed WHITE proxy card will vote
in accordance with your direction, as indicated thereon, if your proxy card is
received and is properly executed. If you properly execute your WHITE proxy and
give no voting instructions with respect to a Proposal, your shares will be
voted in favor of the Proposal. The duly-appointed Proxies, in their discretion,
may vote upon such other matters as may properly come before the Meeting. Your
Trustees are not aware of any other matters to come before the Meeting.
As of the Record Date, there were outstanding and entitled to be voted
_____ Portfolio Shares. As of the Record Date __________, each held for the
benefit of others more than 5% of the Portfolio. Trustees and officers of The
Navellier Performance Funds own in the aggregate less than 1% of the shares of
the Portfolio. To the knowledge of Mr. Navellier, no other person then owned
more than 5% of the outstanding shares of the Portfolio.
As more fully described in this combined prospectus/proxy statement, the
Meeting has been called for the following purpose:
PROPOSAL 1.
To approve a proposed Agreement and proposed Plan of Reorganization (the
"Plan"), whereby the Portfolio would transfer all of its assets to the
Large Cap Growth Fund (the "Acquiring Fund") of the Touchstone Strategic
Trust in a tax-free exchange for shares of beneficial interest in the
Acquiring Fund that would then be distributed to the shareholders of the
Portfolio. Also, as part of the Plan, the Navellier Large Cap Growth
Portfolio of The Navellier Millennium Funds ("Millennium Portfolio") would
transfer all of its assets to the Acquiring Fund in a tax-free exchange for
shares of beneficial interest in the Acquiring Fund that would then be
distributed to the Shareholders of the Millennium Portfolio. Also, as part
of the Plan, the Acquiring Fund would assume all valid liabilities of the
Portfolio and of the Millennium Portfolio.
As described previously, if holders of more than 50% of the outstanding
shares of record are present in person or by proxy, the approval by the
Portfolio of Proposal 1 at the Meeting requires the affirmative vote of at least
67% of the Portfolio Shares present in person or represented by proxy at the
Meeting or the vote of more than 50% of the outstanding shares entitled to vote,
whichever is less.
MR. NAVELLIER AND THE OTHER TRUSTEES OF THE PORTFOLIO UNANIMOUSLY RECOMMEND
THAT THE PROPOSED REORGANIZATION DESCRIBED HEREIN BE "APPROVED."
OTHER BUSINESS
The Portfolio Trustees know of no business to be brought before the Meeting
other than the matters set forth in this combined prospectus/proxy statement.
Should any other matter requiring a vote of Shareholders arise, however, the
Proxies will vote thereon according to their best judgment in the interests of
the Portfolio and of the Shareholders.
By Louis G. Navellier
----------------------
Trustee, The Navellier
Performance Funds
One East Liberty Street, Third Floor
Reno, Nevada 89501
August 13, 2003
APPENDIX A:
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this 30th day of June, 2003, by and between THE NAVELLIER MILLENNIUM FUNDS (the
"Millennium Fund"), a Delaware business trust with its principal place of
business at One East Liberty Street, Third Floor, Reno, Nevada 89501, THE
NAVELLIER PERFORMANCE FUNDS (the "Performance Funds"), a Delaware business trust
with its principal place of business at One East Liberty Street, Third Floor,
Reno, Nevada 89501 and TOUCHSTONE STRATEGIC TRUST, a Massachusetts business
trust with its principal place of business at 221 East Fourth Street, Suite 300,
Cincinnati, Ohio 45202.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), with respect to the
proposed reorganizations of the NAVELLIER LARGE CAP GROWTH PORTFOLIO (the
"Portfolio"), which portfolio is a series of the Navellier Performance Funds and
the NAVELLIER LARGE CAP GROWTH PORTFOLIO (the "Millennium Portfolio") which
portfolio is a series of the Navellier Millennium Funds), pursuant to which the
Portfolio and the Millennium Portfolio will be merged into and become part of
the Large Cap Growth Fund (the "Acquiring Fund") of the Touchstone Strategic
Trust (the "Reorganization"). Specifically, this Agreement is intended to be and
is adopted for the purpose of providing for the Reorganization of the Portfolio
and the Millennium Portfolio into the Acquiring Fund. The Reorganization will
consist of the transfer of all of the assets of the Portfolio and the Millennium
Portfolio to the Acquiring Fund in exchange solely for (i) shares of beneficial
interest in the Acquiring Fund (the "Acquiring Fund Shares") and (ii) the
assumption by the Acquiring Fund of all valid liabilities of the Portfolio and
of the Millennium Portfolio and the distribution of the Acquiring Fund Shares to
the Shareholders of the Portfolio and the of Millennium Portfolio in complete
liquidation of the Portfolio and the Millennium Portfolio, as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Performance Funds and the Millennium Funds and the Touchstone
Strategic Trust are each open-end, registered investment companies of the
management type and the Portfolio and the Millennium Portfolio own securities
which are assets of the character in which the Acquiring Fund is permitted to
invest;
WHEREAS, the Trustees of the Portfolio and the Trustees of the Millennium
Portfolio have each determined, with respect to such Reorganization, that the
exchange of all of the assets of the Portfolio and all the assets of the
Millennium Portfolio for Acquiring Fund shares and the assumption of all valid
liabilities of the Portfolio and of the Millennium Portfolio by the Acquiring
Fund is in the best interests of the Portfolio and the Millennium Portfolio and
their Shareholders and that the interests of the existing Shareholders of the
Portfolio and the Millennium Portfolio would not be diluted as a result of this
transaction; and
WHEREAS, the purpose of the Reorganization is to combine the assets of the
Acquiring Fund with those of the Portfolio and the Millennium Portfolio in an
attempt to achieve greater operating economies and to retain Navellier
Management, Inc. as the investment sub-advisor to manage the assets of the
Acquiring Fund after the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree, with
respect to the Reorganization, as follows:
1. THE TRANSFER OF THE ASSETS OF THE PORTFOLIO AND THE ASSETS OF THE
MILLENNIUM PORTFOLIO TO THE ACQUIRING FUND IN EXCHANGE FOR ACQUIRING FUND
SHARES, THE ASSUMPTION OF ALL VALID LIABILITIES OF THE PORTFOLIO AND OF THE
MILLENNIUM PORTFOLIO BY THE ACQUIRING FUND AND THE LIQUIDATION OF THE
PORTFOLIO AND THE MILLENNIUM PORTFOLIO
1.1 For the Reorganization, the closing shall take place as
provided for in paragraph 3.1 ("Closing") and the provisions of
paragraphs 1 through 8 of this Agreement shall apply. At the Closing,
the Portfolio and the Millennium Portfolio agree to transfer all of
their assets, as set forth in paragraph 1.2, to the Acquiring Fund,
and the Acquiring Fund agrees in exchange therefore: (1) to deliver to
the Portfolio and to the Millennium Portfolio the number of Acquiring
Fund Shares, including fractional Acquiring Fund Shares, determined by
dividing the value of the Portfolio's net assets and the value of the
Millennium Portfolio's net assts each computed in the manner and as of
the time and date set forth in paragraph 2.1 by the net asset value of
one Acquiring Fund Share computed in the manner and as of the time and
date set forth in paragraph 2.2; and (ii) to assume all valid
liabilities of the Portfolio and of the Millennium Portfolio, as set
forth in paragraph 1.3.
1.2 The assets of the Portfolio and the assets of the Millennium
Portfolio to be acquired by the Acquiring Fund shall consist of all
property, including, without limitation, all cash, securities,
interests, and dividends or interest receivable which are owned by the
Portfolio and owned by the Millennium Portfolio and any deferred or
prepaid expenses shown as assets on the books of the Portfolio or on
the books of the Millennium Portfolio on the closing date provided in
paragraph 3.1 (the "Closing Date").
1.3 The Portfolio and the Millennium Portfolio will each endeavor
to discharge all of their known valid liabilities and obligations
prior to the Closing Date. The Acquiring Fund shall assume all valid
liabilities, expenses, costs, charges and reserves reflected on
unaudited statements of assets and liabilities of the Portfolio and of
the Millennium Portfolio prepared by the administrators of the
Acquiring Fund and the Portfolio and the Millennium Portfolio, as of
the Valuation Date (as defined in paragraph 2.1), in accordance with
generally accepted accounting principles consistently applied from the
prior audited period.
1.4 Immediately after the transfer of assets provided for in
paragraph 1.1, the Portfolio and the Millennium Portfolio will each
distribute pro rata to their Shareholders of record, determined as of
immediately after the close of business on the Closing Date (the
"Portfolio Shareholders") and (the "Millennium Shareholders"), the
Acquiring Fund Shares received by the Portfolio and by the Millennium
Portfolio pursuant to paragraph 1.1 and will each completely
liquidate. Such distributions and liquidations will be accomplished by
the transfer of the Acquiring Fund Shares then credited to the account
of the Portfolio and to the account of the Millennium Portfolio on the
books of the Acquiring Fund to the share records of the Acquiring Fund
in the names of the Portfolio Shareholders and in the names of the
Millennium Portfolio Shareholders and representing the respective pro
rata number of the Acquiring Fund Shares due such Shareholders. All
issued and outstanding shares of the Portfolio and of the Millennium
Portfolio will simultaneously be canceled on the books of the
Portfolio and of the Millennium Portfolio. The Acquiring Fund shall
not issue certificates representing the Acquiring Fund Shares in
connection with such exchange. Ownership of Acquiring Fund Shares will
be shown on the books of the Acquiring Fund's transfer agent.
2. VALUATION
2.1 The value of the Portfolio's assets and the value of the
Millennium Portfolio's assets to be acquired by the Acquiring Fund
hereunder shall be the net asset value of such assets computed as of
immediately after the close of business of the New York Stock Exchange
on the Closing Date (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures for computing net
asset value set forth in the Portfolio's and in the Millennium
Portfolio's then-current prospectus or statement of additional
information.
2.2 The net asset value of an Acquiring Fund Share shall be the
net asset value per share computed as of immediately after the close
of business of the New York Stock Exchange on the Valuation Date,
using the valuation procedures for computing net asset value set forth
in the Touchstone Strategic Trust's then-current prospectus or
statement of additional information.
2.3 The number of the Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Portfolio's
assets and the Millennium Portfolio's assets shall be determined by
dividing the value of the net assets of the Portfolio and the net
assets of the Acquiring Fund determined using the same valuation
procedures referred to in paragraph 2.1 by the net asset value of
Performance Large Cap Growthdetermined in accordance with paragraph
2.2.
2.4 All computations of value for the Acquiring Fund shall be
made by Integrated Fund Services, Inc.; all computations of value for
the Portfolio and for the Millennium Portfolio shall be made by FBR
National Bank & Trust.
3. CLOSING AND CLOSING DATE
3.1 The Closing for the Reorganization shall be September 22,
2003 or such other date as the parties may agree to in writing. All
acts taking place at the Closing shall be
deemed to take place simultaneously as of immediately after the close
of business on the Closing Date unless otherwise agreed to by the
parties. The close of business on the Closing Date shall be as of 4:00
p.m., New York Time. The Closing shall be held at the offices of the
Acquiring Fund, 221 East Fourth Street, Suite 300, Cincinnati, Ohio
45202, or at such other time and/or place as the parties may agree.
3.2 FBR National Bank & Trust, Bethesda, Maryland, as custodian
for the Portfolio and for the Millennium Portfolio (the "Custodian"),
shall deliver at the Closing a certificate of an authorized officer
stating that each of: (i) the Portfolio's and the Millennium
Portfolio's portfolio securities, cash, and any other assets shall
have been delivered in proper form to the Acquiring Fund within two
business days prior to or on the Closing Date; and (ii) all necessary
taxes, including all applicable Federal and state stock transfer
stamps, if any, shall have been paid, or provision for payment shall
have been made, in conjunction with the delivery of the Portfolio's
and the Millennium Portfolio's portfolio securities.
3.3 FBR National Bank & Trust, (the "Transfer Agent"), on behalf
of the Portfolio and on behalf of the Millennium Portfolio, shall
deliver at the Closing a certificate of an authorized officer stating
that their records contain the names and addresses of the Portfolio
Shareholders and of the Millennium Portfolio Shareholders and the
number and percentage ownership of outstanding shares owned by each
such shareholder immediately prior to the Closing. The Acquiring Fund
by an authorized officer of Integrated Fund Services, Inc. shall issue
and deliver a confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date to the Secretary of the Portfolio and to
the Secretary of the Millennium Portfolio or provide evidence
satisfactory to the Portfolio and to the Millennium Portfolio that
such Acquiring Fund Shares have been credited to the Portfolio's
account and to the Millennium Portfolio's account on the books of the
Acquiring Fund. At the Closing, each party shall deliver to the other
such bills of sales, checks, assignments, share certificates, if any,
receipts or other documents as such other party or its counsel may
reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Performance Funds, on its own and on behalf of the
Portfolio, and the Millennium Funds on its own and on behalf of the
Millennium Portfolio each represents and warrants to the Touchstone
Strategic Trust and the Acquiring Fund as follows:
(a) The Performance Funds and the Millennium Funds are each a
business trust duly organized, validly existing, and in good standing
under the laws of the State of Delaware;
(b) The Performance Funds and the Millennium Funds are each a
registered investment company classified as a
management company of the open-end type, and their registrations with
the Securities and Exchange Commission (the "Commission"), as an
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the registration of their shares, under
the Securities Act of 1933, as amended (the "1933 Act") are in full
force and effect;
(c) Neither the Performance Funds nor the Portfolio nor the
Millennium Funds nor the Millennium Portfolio is in, and the
execution, delivery and performance of this Agreement will not result
in, a material violation of the Performance Funds' or the Millennium
Funds' Declarations of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which
the Performance Funds or the Portfolio or the Millennium Funds or the
Millennium Portfolio is a party or by which any of them are bound;
(d) Neither the Performance Funds nor the Portfolio nor the
Millennium Funds nor the Millennium Portfolio has any material
contracts or other commitments (other than this Agreement) which will
be terminated with liability to them prior to the Closing Date;
(e) Except as otherwise disclosed in writing to and accepted by
the Touchstone Strategic Trust or the Acquiring Fund, no material
litigation or administrative proceeding or investigation of or before
any court or governmental body is presently pending or to their
knowledge threatened against the Performance Funds or the Portfolio or
the Millennium Funds or the Millennium Portfolio or any of their
properties or assets which, if adversely determined, would materially
and adversely affect their financial condition or the conduct of their
business. Neither the Portfolio or the Millennium Portfolio knows of
any facts which might form the basis for the institution of such
proceedings and neither the Portfolio nor the Millennium Portfolio is
a party to or subject to the provisions of any order, decree or
judgment of any court or governmental body which materially and
adversely affects the business or the ability of the Portfolio or the
Millennium Portfolio to consummate the transactions herein
contemplated;
(f) The Statement of Assets and Liabilities of the Portfolio and
the Statement of Assets and Liabilities of the Millennium Portfolio
each at December 31, 2002 have been audited by Tait, Weller & Baker,
independent accountants, and are in accordance with generally accepted
accounting principles consistently applied, and such statements
(copies of which have been furnished to the Acquiring Fund) fairly
reflect the financial conditions of the Portfolio and of the
Millennium Portfolio as of such date, and there are no contingent
liabilities of the Portfolio or of the Millennium Portfolio as of such
date not disclosed therein;
(g) Since December 31, 2002, there have not been any material
adverse changes in the Portfolio's or in the Millennium Portfolio's
financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or any incurrence by the Portfolio or by the
Millennium Portfolio of indebtedness maturing more than one year from
the date such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Acquiring Fund. For the purposes of this
subparagraph (g), a decline in net asset value per share of the
Portfolio or of the Millennium Portfolio, the discharge of Portfolio
or of the Millennium Portfolio liabilities, or the redemption of
Portfolio or Millennium Portfolio shares by Portfolio or Millennium
Portfolio Shareholders shall not constitute a material adverse change;
(h) At the Closing Date, all material Federal and other tax
returns and reports of the Millennium Portfolio and the Portfolio
required by law to have been filed by such date or due after request
for extension, if any, shall have been filed and are or will be
correct, and all Federal and other taxes shown as due or required to
be shown as due on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and to the
best knowledge of the Millennium Portfolio and the Portfolio, no such
return is currently under audit and no assessment has been asserted
with respect to such returns;
(i) For each taxable year of its operation, the Portfolio and the
Millennium Portfolio has met the requirements of Subchapter M of the
Code for qualification as a regulated investment company and each has
elected to be treated as such;
(j) All issued and outstanding shares of the Portfolio and of the
Millennium Portfolio are, and at the Closing Date will be, duly and
validly issued and outstanding, fully paid and non-assessable by the
Portfolio and by the Millennium Portfolio. All of the issued and
outstanding shares of the Portfolio and of the Millennium Portfolio
will, at the time of Closing, be held by the persons and in the
amounts set forth in the records of the Transfer Agent, on behalf of
the Portfolio and on behalf of the Millennium Portfolio as provided in
paragraph 3.3. Neither the Portfolio nor the Millennium Portfolio have
outstanding any options, warrants or other rights to subscribe for or
to purchase any of their shares, nor is there outstanding any security
convertible into any of their shares;
(k) At the Closing Date, both the Portfolio and the Millennium
Portfolio will each have good and marketable title to their assets to
be transferred to the Acquiring Fund pursuant to paragraph 1.2 and
full right, power and authority to sell, assign, transfer and deliver
such assets hereunder and, upon delivery and payment for such assets,
the Acquiring Fund will acquire good and marketable title thereto,
subject to any restrictions as might arise under the 1933 Act, other
than as disclosed to the Acquiring Fund;
(l) The execution, delivery and performance of this Agreement
will have been duly authorized prior to the Closing Date by all
necessary action on the part of the Performance Funds' and the
Millennium Funds' Trustees and, subject to the approval of the
Portfolio's Shareholders and of the Millennium Portfolio's
Shareholders, this Agreement will constitute a valid and binding
obligation of the Performance Funds and of the Portfolio and of the
Millennium Funds and of the Millennium Portfolio, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(m) The information to be furnished by the Performance Funds and
the Portfolio and by the Millennium Funds and the Millennium Portfolio
for use in registration statements, proxy materials and other
documents which may be necessary in connection with the transactions
contemplated hereby shall be accurate and complete in all material
respects and shall comply in all material respects with Federal
securities and other laws and regulations thereunder applicable
thereto; and
(n) The proxy statements of the Performance Funds and of the
Millennium Funds (the "Proxy Statement") to be included in the
Registration Statement referred to in paragraph 5.6 (other than
information therein that relates to the Touchstone Strategic Trust and
the Acquiring Fund) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not materially
misleading.
4.2 Touchstone Strategic Trust, on its own behalf and on behalf
of the Acquiring Fund, represents and warrants to the Performance
Funds and the Portfolio and to the Millennium Funds and the Millennium
Portfolio as follows:
(a) Touchstone Strategic Trust is a business trust duly
organized, validly existing and in good standing under the laws of the
State of Massachusetts;
(b) Touchstone Strategic Trust is a registered investment company
classified as a management company of the open-end type, and its
registration with the Commission, as an investment company under the
1940 Act, and the registration of its shares, under the 1933 Act, are
in full force and effect;
(c) The current prospectus and statement of additional
information of Touchstone Strategic Trust conform in all material
respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and do
not include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not materially misleading;
(d) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets;
(e) Neither Touchstone Strategic Trust nor the Acquiring Fund is
in, and the execution, delivery and performance of this Agreement will
not result in, a material violation of Touchstone Strategic Trust's
Declaration of Trust or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which Touchstone
Strategic Trust or the Acquiring Fund is a party or by which
Touchstone Strategic Trust or the Acquiring Fund are bound;
(f) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or threatened against Touchstone Strategic Trust or the
Acquiring Fund or any of their properties or assets, except as
previously disclosed in writing to the Portfolio or the Millennium
Portfolio. Neither Touchstone Strategic Trust nor the Acquiring Fund
knows of any facts which might form the basis for the institution of
such proceedings and neither Touchstone Strategic Trust nor the
Acquiring Fund is a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body which
materially and adversely affects the business or the ability of
Touchstone Strategic Trust or the Acquiring Fund to consummate the
transactions contemplated herein;
(g) The Statement of Assets and Liabilities of the Acquiring Fund
at March 31, 2003, audited by Ernst & Young LLP, independentauditors,
and a copy of which has been furnished to the Portfolio and to the
Millennium Portfolio, fairly and accurately reflects the financial
condition of the Acquiring Fund as of such date in accordance with
generally accepted accounting principles consistently applied;
(h) Since March 31, 2003, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or any incurrence by the Acquiring Fund of
indebtedness maturing more than one year from the date such
indebtedness was incurred. For the purposes of this subparagraph (h),
a decline in net asset value per share of the Acquiring Fund shares,
the discharge of Acquiring Fund liabilities or the redemption of
Acquiring Fund shares by Acquiring Fund Shareholders, shall not
constitute a material adverse change;
(i) At the Closing Date all material Federal and other tax
returns and reports of Touchstone Strategic Trust and the Acquiring
Fund required by law to have been filed by such date or due after
request for extension, if any, shall have been filed and are or will
be correct, and all Federal and other taxes shown as due or required
to be shown as due on said returns and reports shall have been paid or
provision
shall have been made for the payment thereof, and, to the best
knowledge of Touchstone Strategic Trust and the Acquiring Fund, no
such return is currently under audit and no assessment has been
asserted with respect to such returns;
(j) For each taxable year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for qualification
as a regulated investment company and has elected to be treated as
such;
(k) All issued and outstanding Acquiring Fund Shares are, and at
the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable by the Acquiring Fund. The Acquiring
Fund does not have outstanding any options, warrants or other rights
to subscribe for or to purchase any Acquiring Fund Shares, nor is
there outstanding any security convertible into any Acquiring Fund
Shares;
(l) The execution, delivery and performance of this Agreement
will have been fully authorized prior to the Closing Date by all
necessary action, if any, on the part of the Trustees of Touchstone
Strategic Trust and this Agreement will constitute a valid and binding
obligation of the Acquiring Fund enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights, and to general equity principles;
(m) The Acquiring Fund Shares to be issued and delivered
(transferred on the Acquiring Fund's books) to the Portfolio and to
the Millennium Portfolio for the accounts of the Portfolio
Shareholders and for the accounts of the Millennium Portfolio
Shareholders, pursuant to the terms of this Agreement, will, at the
Closing Date, have been duly authorized and, when so issued and
delivered, will be duly and validly issued Acquiring Fund Shares, and
will be fully paid and non-assessable by the Acquiring Fund;
(n) The information to be furnished by the Acquiring Fund for use
in registration statements, proxy materials and other documents which
may be necessary in connection with the transactions contemplated
hereby shall be accurate and complete in all material respects and
shall comply in all material respects with Federal securities and
other laws and regulations applicable thereto;
(o) The Proxy Statement to be included in the Registration
Statement (only insofar as it relates to Touchstone Strategic Trust
and the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statement therein, in
light of the circumstances under which such statements were made, not
materially misleading; and
(p) Touchstone Strategic Trust and the Acquiring Fund each agrees
to use all reasonable efforts to obtain the approvals and
authorizations required by the 1933 Act, the 1940 Act and such of the
state blue sky or securities laws as may be necessary in order to
continue their operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND, THE PORTFOLIO AND THE MILLENNIUM PORTFOLIO
The following covenants of the Acquiring Fund and of the Portfolio and of
the Millennium Portfolio, as applicable, are made respectively by Touchstone
Strategic Trust and by the Performance Funds and by the Millennium Funds:
5.1 The Acquiring Fund and the Portfolio and the Millennium Portfolio
each will operate its business in the ordinary course between the date
hereof and the Closing Date, it being understood that such ordinary course
of business will include the declaration and payment of customary dividends
and distributions and any other distribution that may be advisable.
5.2 The Portfolio and the Millennium Portfolio will each call a
meeting of their Shareholders to consider and act upon this Agreement and
to take all other action necessary to obtain approval of the transactions
contemplated herein.
5.3 The Portfolio and the Millennium Portfolio each covenant that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with
the terms of this Agreement.
5.4 The Portfolio and the Millennium Portfolio will each assist the
Acquiring Fund in obtaining such information as the Acquiring Fund
reasonably requests concerning the beneficial ownership of the shares of
the Portfolio and of the Millennium Portfolio.
5.5 Subject to the provisions of this Agreement, the Acquiring Fund
and the Portfolio and the Millennium Portfolio will each take, or cause to
be taken, all actions and do, or cause to be done, all things reasonably
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement.
5.6 The Portfolio and the Millennium Portfolio will each provide the
Acquiring Fund with information reasonably necessary for the preparation of
a prospectus (the "Prospectus") which will include the Proxy Statement
referred to in paragraph 4.1(n), all to be included in a Registration
Statement on Form N-14 of the Touchstone Strategic Trust (the "Registration
Statement"), in compliance with the 1933 Act, the Securities Exchange Act
of 1934, as amended (the "1934 Act"), and the 1940 Act, in connection with
the meetings of the Portfolio Shareholders and the
Millennium Portfolio Shareholders to consider approval of this Agreement
and the transactions contemplated herein (the "Meeting").
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PERFORMANCE FUNDS AND THE
PORTFOLIO AND THE MILLENNIUM FUNDS AND THE MILLENNIUM PORTFOLIO
The obligations of the Performance Funds and the Portfolio and the
Millennium Funds and the Millennium Portfolio to consummate the transactions
provided for herein shall be subject, at their election, to the performance by
Touchstone Strategic Trust and the Acquiring Fund of all the obligations to be
performed by Touchstone Strategic Trust and the Acquiring Fund hereunder on or
before the Closing Date and, in addition thereto, to the following further
conditions:
6.1 All representations and warranties of Touchstone Strategic Trust
and the Acquiring Fund contained in this Agreement shall be true and
correct in all material respects as of the date hereof and, except as they
may be affected by the transactions contemplated by this Agreement, as of
the Closing Date with the same force and effect as if made on and as of the
Closing Date; and
6.2 Touchstone Strategic Trust shall have delivered to the Performance
Funds and to the Millennium Funds, on the Closing Date, a certificate
executed in the name of Touchstone Strategic Trust by Touchstone Strategic
Trust's President and Treasurer, in a form reasonably satisfactory to the
Performance Funds and to the Millennium Funds and dated as of the Closing
Date, to the effect that the representations and warranties of the
Touchstone Strategic Trust and the Acquiring Fund made in this Agreement
are true and correct at and as of the Closing Date, except as these
representations and warranties may be affected by the transactions
contemplated by this Agreement and as to such other matters as Touchstone
Strategic Trust shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF TOUCHSTONE STRATEGIC TRUST AND THE
ACQUIRING FUND
The obligations of Touchstone Strategic Trust and the Acquiring Fund to
complete the transactions provided for herein shall be subject, at their
election, to the performance by the Performance Funds and the Millennium Funds
and the Portfolio and the Millennium Portfolio of all of the obligations to be
performed by them hereunder on or before the Closing Date and, in addition
thereto, to the following conditions:
7.1 All representations and warranties of the Performance Funds and
the Millennium Funds and the Portfolio and the Millennium Portfolio
contained in this Agreement shall be true and correct in all material
respects as of the date hereof and, except as these representations and
warranties may be affected by the transactions contemplated by this
Agreement, as of the Closing Date, with the same force and effect as if
made on and as of the Closing Date;
7.2 The Performance Funds and the Millennium Funds shall each have
delivered to Touchstone Strategic Trust statements of the Portfolio's and
of the Millennium Portfolio's assets and liabilities, as of the Closing
Date, each certified by the Treasurer of the Performance Funds and the
Millennium Funds; and
7.3 The Performance Funds and the Millennium Funds shall each have
delivered to Touchstone Strategic Trust, on the Closing Date, certificates
executed in their respective names and in the Portfolio's and Millennium
Portfolio's names by the Performance Funds' President and Treasurer and by
the Millennium Funds' President and Treasurer, in
form and substance satisfactory to Touchstone Strategic Trust and dated as
of the Closing Date, to the effect that the representations and warranties
of the Performance Funds and the Millennium Funds and the Portfolio and the
Millennium Portfolio, with respect to the Performance Funds and the
Millennium Funds and the Portfolio and the Millennium Portfolio made in
this Agreement are true are correct at and as of the Closing Date, except
as these representations and warranties may be affected by the transactions
contemplated by this Agreement.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
PORTFOLIO AND THE MILLENNIUM PORTFOLIO
If any of the conditions set forth below do not exist on or before the
Closing Date, with respect to the Portfolio or the Millennium Portfolio or the
Acquiring Fund, then the other party to this Agreement shall, at its option, not
be required to consummate the transactions contemplated by this Agreement:
8.1 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding
shares of beneficial interest of the Portfolio and of the Millennium
Portfolio in accordance with the provisions of each of the Performance
Funds' and the Millennium Funds' Declaration of Trust and By-Laws and
copies of the resolutions evidencing such approvals shall have been
delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither Touchstone Strategic Trust nor the Acquiring Fund nor the
Performance Funds nor the Portfolio nor the Millennium Funds nor the
Millennium Portfolio may waive the conditions set forth in this paragraph
8.1;
8.2 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities deemed necessary
by Touchstone Strategic Trust or the Performance Funds or the Millennium
Funds to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain any such consent, order or permit would not involve a risk of a
material adverse effect on the assets or properties of the Touchstone
Strategic Trust or the Acquiring Fund or the Performance Funds or the
Millennium Funds or the Portfolio or the Millennium Portfolio, provided
that any party hereto may, for itself, waive any of such conditions;
8.3 The Registration Statement shall have become effective under the
1933 Act and no stop orders suspending the effectiveness thereof shall have
been issued; and
8.4 The Selling Fund shall have declared a dividend or dividends
which, together with all previous such dividends shall have the effect of
distributing to the Selling Fund Shareholders all of the Selling Fund's
investment company taxable income for all taxable periods ending on the
Closing Date (computed without regard to any deduction for dividends paid)
and all of the net capital gains realized in all taxable periods ending on
the Closing Date (after reduction for any capital loss carryforward).
8.5 The Company and the Trust shall have received a favorable opinion
of Sullivan & Worcester LLP substantially to the effect that, for federal
income tax purposes:
(a) The transfer of all of the Selling Fund assets in exchange solely
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
the liabilities of the Selling Fund followed by the distribution of the
Acquiring Fund Shares to the Selling Fund Shareholders in dissolution and
liquidation of the Selling Fund will constitute a "reorganization" within
the meaning of Section 368(a)(1)(D) of the Code, and the Acquiring Fund and
the Selling Fund will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Selling Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the
liabilities of the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund upon the
transfer of the Selling Fund assets to the Acquiring Fund in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
liabilities of the Selling Fund or upon the distribution (whether actual or
constructive) of the Acquiring Fund Shares to Selling Fund Shareholders in
exchange for their shares of the Selling Fund.
(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for the
Acquiring Fund Shares in liquidation of the Selling Fund.
(e) The aggregate tax basis of the Acquiring Fund Shares received by
each Selling Fund Shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Selling Fund shares held by such
Selling Fund Shareholder immediately prior to the Closing, and the holding
period of the Acquiring Fund Shares received by each Selling Fund
Shareholder will include the period during which the Selling Fund shares
exchanged therefor were held by such Selling Fund Shareholder (provided the
Selling Fund shares were held as capital assets on the date of the
Closing).
(f) The tax basis of the Selling Fund assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Selling Fund
immediately prior to the Closing, and the holding period of the assets of
the Selling Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Selling Fund.
8.6 The Acquiring Fund shall have received from Ernst & Young LLP a
letter addressed to the Acquiring Fund, in form and substance satisfactory
to the Acquiring Fund, to the effect that:
(a) they are independent auditors with respect to the Selling Fund
within the meaning of the 1933 Act and the applicable published rules and
regulations thereunder;
(b) on the basis of limited procedures agreed upon by the Acquiring
Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards), the Capitalization Table
appearing in the Registration Statement and Prospectus/Proxy Statement has
been obtained from and is consistent with the accounting records of the
Selling Fund;
(c) on the basis of limited procedures agreed upon by the Acquiring
Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards), the pro forma financial
statements that are included in the Registration Statement and
Prospectus/Proxy Statement agree to the underlying accounting records of
the Acquiring Fund and the Selling Fund or with written estimates provided
by each Fund's management, and were found to be mathematically correct; and
(d) on the basis of limited procedures agreed upon by the Acquiring
Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards), the data utilized in the
calculations of the pro forma expense ratios appearing in the Registration
Statement and Prospectus/Proxy Statement agree with underlying accounting
records of the Selling Fund or with written estimates by the Selling Fund's
management and were found to be mathematically correct.
In addition, unless waived by the Acquiring Fund, the Acquiring Fund shall
have received from Ernst & Young LLP a letter addressed to the Acquiring
Fund dated on the Closing Date, in form and substance satisfactory to the
Acquiring Fund, to the effect that on the basis of limited procedures
agreed upon by the Acquiring Fund (but not an examination in accordance
with generally accepted auditing standards), the net asset value per share
of the Selling Fund as of the Valuation Date was computed and the valuation
of the portfolio was consistent in the valuation practices of the Acquiring
Fund.
8.7 The Selling Fund shall have received from Tait Weller & Baker LLP
a letter addressed to the Selling Fund, in form and substance satisfactory
to the Selling Fund, to the effect that:
(a) they are independent auditors with respect to the Acquiring Fund
within the meaning of the 1933 Act and the applicable published rules and
regulations thereunder;
(b) they had performed limited procedures agreed upon by the Selling
Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards) which consisted of a reading of
any unaudited pro forma financial statements included in the Registration
Statement and Prospectus/Proxy Statement, and making inquiries of
appropriate officials of the Trust responsible for financial and accounting
matters whether such unaudited pro forma financial statements comply as to
form in all material respects with the applicable accounting requirements
of the 1933 Act and the published rules and regulations thereunder;
(c) on the basis of limited procedures agreed upon by the Selling Fund
and described in such letter (but not an examination in accordance with
generally accepted auditing standards), the Capitalization Table appearing
in the Registration Statement and
Prospectus/Proxy Statement has been obtained from and is consistent with
the accounting records of the Acquiring Fund; and
(d) on the basis of limited procedures agreed upon by the Selling Fund
(but not an examination in accordance with generally accepted auditing
standards), the data utilized in the calculations of the pro forma expense
ratios appearing in the Registration Statement and Prospectus/Proxy
Statement agree with underlying accounting records of the Acquiring Fund or
with written estimates by the Acquiring Fund's management and were found to
be mathematically correct.
8.8 The change of the Acquiring Fund from a diversified series of the
Trust to a non-diversified series of the Trust upon completion of the
Reorganization shall have been approved by the requisite vote of the
holders of the outstanding shares of the Acquiring Fund in accordance with
the provisions of the Trust's Agreement and Declaration of Trust and
Bylaws.
9. BROKERAGE FEES AND EXPENSES
9.1 Touchstone Strategic Trust and the Performance Funds and the
Millennium Funds each represents and warrants to the others that there are
no brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
9.2 Navellier Management Inc. will bear the aggregate expenses and
costs of its solicitation of this Proxy Solicitation regarding the
Reorganization.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 Touchstone Strategic Trust and the Performance Funds and the
Millennium Funds agree that no party to this Agreement has made any
representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement, or in any document delivered pursuant hereto or in connection
herewith, shall survive the consummation of the transactions contemplated
hereunder.
11. TERMINATION
This Agreement and the transactions contemplated hereby may be
terminated and abandoned by any party by resolution of the party's Board of
Trustees or Board of Trustees and resolution passed by the requisite number
of Shareholders of that party at any time prior to the Closing Date if
circumstances should develop that make proceeding with the Agreement
inadvisable.
12. WAIVER
Touchstone Strategic Trust and the Performance Funds and the
Millennium Funds, by mutual consent of their respective Boards of Trustees,
may waive in writing any condition to their respective obligations
hereunder, except as provided herein.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of
Touchstone Strategic Trust and the Performance Funds and the Millennium
Funds; provided, however, that following the meetings of the Portfolio
Shareholders and of the Millennium Portfolio Shareholders called pursuant
to paragraph 5.2 of this Agreement, no such amendment may have the effect
of changing the provisions for determining the number of Acquiring Fund
Shares to be issued to the Portfolio Shareholders or to the Millennium
Portfolio Shareholders under this Agreement to the detriment of such
Shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by
prepaid telegraph, telecopy or certified mail addressed to Touchstone
Strategic Trust at 221 East Fourth Street, Suite 300, Cincinnati, Ohio
45202, or to the Performance Funds or the Millennium Funds at One East
Liberty Street, Third Floor, Reno, Nevada 89501.
15. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
15.1 The Article and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
15.2 This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3 This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
15.4 This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns, but no
assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of
the other party. Nothing herein expressed or implied is intended or
shall be construed to confer upon or to give any person, firm or
corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of
this Agreement.
15.5 It is expressly agreed that the obligations of the
Performance Funds and of the Millennium Funds and of the Portfolio and
of the Millennium Portfolio hereunder shall not be binding upon any of
the Trustees, Shareholders, nominees, officers, agents or employees of
the Performance Funds and of the Millennium Funds personally, but
shall bind only the Trust property of the Performance Funds and the
Millennium Funds and the Portfolio and the Millennium Portfolio, as
provided in the
Declarations of Trust of the Performance Funds and of the Millennium
Funds. The execution and delivery by such officers of the Performance
Funds and of the Millennium Funds shall not be deemed to have been
made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the
Performance Funds and of the Millennium Funds and the Portfolio and
the Millennium Portfolio as provided in the Declarations of Trust of
the Performance Funds and of the Millennium Funds.
15.6 It is expressly agreed that the obligations of the
Touchstone Strategic Trust and the Acquiring Fund hereunder shall not
be binding upon any of the Trustees, Shareholders, nominees, officers,
agents or employees of Touchstone Strategic Trust personally, but
shall bind only the trust property of the Touchstone Strategic Trust
and the Acquiring Fund, as provided in Touchstone Strategic Trust's
Declaration of Trust. The execution and delivery by such officers of
Touchstone Strategic Trust shall not be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Touchstone
Strategic Trust and the Acquiring Fund, as provided in the Touchstone
Strategic Trust's Declaration of Trust.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its President and attested by its Secretary.
Attest: TOUCHSTONE STRATEGIC TRUST
By: /s/ Tina Hosking Bloom By: /s/ Michael S. Spangler
-------------------------- ----------------------------
Secretary Vice President
Attest: THE NAVELLIER MILLENNIUM FUNDS
By: /s/ Arjen Kuyper By: /s/ Louis Navellier
-------------------------- ----------------------------
Treasurer President
Attest: THE NAVELLIER PERFORMANCE FUNDS
By: /s/ Arjen Kuyper By: /s/ Louis Navellier
-------------------------- ----------------------------
Treasurer President
PROXY
THE NAVELLIER LARGE CAP GROWTH PORTFOLIO
OF
THE NAVELLIER PERFORMANCE FUNDS
One East Liberty Street, Third Floor
Reno, Nevada 89501
--------------------
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS September 19, 2003
THIS PROXY IS SOLICITED BY THE TRUSTEES OF THE NAVELLIER PERFORMANCE FUNDS,
for use at a special meeting of the shareholders of The Navellier Large Cap
Growth Portfolio (the "Portfolio"), an investment portfolio offered by The
Navellier Performance Funds (the "Performance Funds") which meeting will be held
at 10:00 a.m., Pacific Standard Time, on September 19, 2003 at the offices of
The Navellier Performance Funds, One East Liber tyStreet, Third Floor, Reno,
Nevada 89501 (the "Meeting").
The undersigned shareholder of the Portfolio, revoking any and all previous
proxies heretofore given for shares of the Portfolio held by the
undersigned("Shares"), does hereby appoint Louis Navellier and Samuel
Kornhauser, and each and any of them, with full power of substitution to each to
be the attorneys and proxies of the undersigned (the "Proxies"), to attend the
Meeting of the shareholders of the Portfolio, and to represent and direct the
voting interests represented by the undersigned as of the record date for said
Meeting for the Proposal specified below.
This proxy, if properly executed, will be voted in the manner as directed
herein by the undersigned shareholder. Unless otherwise specified below in the
squares provided, the undersigned's vote will be cast "FOR" the Proposal. If no
direction is made for the Proposal, this proxy will be voted "FOR" the Proposal.
In their discretion, the Proxies are authorized to transact and vote upon such
other matters and business as may come before the Meeting or any adjournments
thereof.
Please mark [ ]
your votes as [X]
indicated in [ ]
this example
Proposal 1 To approve a proposed Agreement and Plan of Reorganization (the
"Plan"), whereby the Navellier Large Cap Growth Portfolio of the
Navellier Performance Funds (the "Portfolio") and the Navellier
Large Cap Growth Portfolio of The Navellier Millennium Funds (the
"Millennium Portfolio") would transfer all of their assets to the
Large Cap Growth Fund, a portfolio of the Touchstone Strategic
Trust (the "Acquiring Fund") in exchange for shares of beneficial
interest in the Acquiring Fund that would then be distributed to
the shareholders of the Portfolio and to the Shareholders of the
Millennium Portfolio pro rata. Also, as part of
the Plan, the Acquiring Fund would assume all valid liabilities
of the Portfolio and of the Millennium Portfolio.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
To avoid the expense of adjourning the Meeting to a subsequent date, please
return this proxy in the enclosed self-addressed, postage-paid envelope. THIS
PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE NAVELLIER PERFORMANCE FUNDS
WHICH RECOMMEND A VOTE FOR PROPOSAL 1.
Dated _______________, 2003
________________________ _________________
Signature of Shareholder Number of shares
________________________ _________________
Signature of Shareholder Number of shares
This proxy may be revoked by the shareholder(s) at any time
prior to the special meeting.
NOTE: Please sign exactly as your name appears hereon. If shares are registered
in more than one name, all registered shareholders should sign this proxy; but
if one shareholder signs, that signature binds the other shareholder. When
signing as an attorney, executor, administrator, agent, trustee, or guardian, or
custodian for a minor, please give full title as such. If a corporation, please
sign in full corporate name by an authorized person. If a partnership, please
sign in partnership name by an authorized person.
APPENDIX B
INVESTMENT ADVISORY AGREEMENT
TOUCHSTONE Strategic Trust
INVESTMENT ADVISORY AGREEMENT, dated as of May 1, 2000, amended December
31, 2002, by and between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the
"Advisor"), and TOUCHSTONE STRATEGIC TRUST, a Massachusetts business trust
created pursuant to an Agreement and Declaration of Trust dated November 18,
1982, as amended from time to time (the "Trust").
WHEREAS, the Trust is an open-end diversified management investment company
registered under the Investment Company Act of 1940, as amended, (the "1940
Act"); and
WHEREAS, shares of beneficial interest in the Trust are divided into
separate series (each, along with any series which may in the future be
established, a "Fund"); and
WHEREAS, the Trust desires to avail itself of the services, information,
advice, assistance and facilities of an investment advisor and to have an
investment advisor perform for it various investment advisory and research
services and other management services; and
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and desires to provide investment
advisory services to the Trust;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE ADVISOR. The Trust hereby employs the Advisor to
manage the investment and reinvestment of the assets of each Fund subject to the
control and direction of the Trust's Board of Trustees, for the period on the
terms hereinafter set forth. The Advisor hereby accepts such employment and
agrees during such period to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Advisor shall for all
purposes herein be deemed to be independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISOR. In
providing the services and assuming the obligations set forth herein, the
Advisor may, at its expense, employ one or more sub-advisors for any Fund. Any
agreement between the Advisor and a sub-advisor shall be subject to the renewal,
termination and amendment provisions of paragraph 10 hereof. The Advisor
undertakes to provide the following services and to assume the following
obligations:
a) The Advisor will manage the investment and reinvestment of the
assets of each Fund, subject to and in accordance with the
respective investment objectives and policies of each Fund and
any directions which the Trust's Board of Trustees may issue from
time to time. In pursuance of
the foregoing, the Advisor may engage separate investment
advisors ("Sub-Advisor(s)") to make all determinations with
respect to the investment of the assets of each Fund, to effect
the purchase and sale of portfolio securities and to take such
steps as may be necessary to implement the same. Such
determination and services by each Sub-Advisor shall also include
determining the manner in which voting rights, rights to consent
to corporate action and any other rights pertaining to the
portfolio securities shall be exercised. The Advisor shall, and
shall cause each Sub-Advisor to, render regular reports to the
Trust's Board of Trustees concerning the Trust's and each Fund's
investment activities.
b) The Advisor shall, or shall cause the respective Sub-Advisor(s)
to place orders for the execution of all portfolio transactions,
in the name of the respective Fund and in accordance with the
policies with respect thereto set forth in the Trust's
registration statements under the 1940 Act and the Securities Act
of 1933, as such registration statements may be amended from time
to time. In connection with the placement of orders for the
execution of portfolio transactions, the Advisor shall create and
maintain (or cause the Sub-Advisors to create and maintain) all
necessary brokerage records for each Fund, which records shall
comply with all applicable laws, rules and regulations, including
but not limited to records required by Section 31(a) of the 1940
Act. All records shall be the property of the Trust and shall be
available for inspection and use by the Securities and Exchange
Commission (the "SEC"), the Trust or any person retained by the
Trust. Where applicable, such records shall be maintained by the
Advisor (or Sub-Advisor) for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
c) In the event of any reorganization or other change in the
Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Advisor shall give the
Trust's Board of Trustees written notice of such reorganization
or change within a reasonable time (but not later than 30 days)
after such reorganization or change.
d) The Advisor shall bear its expenses of providing services to the
Trust pursuant to this Agreement except such expenses as are
undertaken by the Trust. In addition, the Advisor shall pay the
salaries and fees, if any, of all Trustees, officers and
employees of the Trust who are affiliated persons, as defined in
Section 2(a)(3) of the 1940 Act, of the Advisor.
e) The Advisor will manage, or will cause the Sub-Advisors to
manage, the Fund assets and the investment and reinvestment of
such assets so as to comply with the provisions of the 1940 Act
and with Subchapter M of the Internal Revenue Code of 1986, as
amended.
3. EXPENSES. The Trust shall pay the expenses of its operation,
including but not limited to (i) charges and expenses for Trust accounting,
pricing and appraisal services and related overhead, (ii) the charges and
expenses of the Trust's auditors; (iii) the charges and expenses of any
custodian, transfer agent, plan agent, dividend disbursing agent and registrar
appointed by the Trust with respect to the Funds; (iv) brokers' commissions, and
issue and transfer taxes, chargeable to the Trust in connection with securities
transactions to which the Trust is a party; (v) insurance premiums, interest
charges, dues and fees for Trust membership in trade associations and all taxes
and fees payable by the Trust to federal, state or other governmental agencies;
(vi) fees and expenses involved in registering and maintaining registrations of
the Trust and/or shares of the Trust with the SEC, state or blue sky securities
agencies and foreign countries, including the preparation of Prospectuses and
Statements of Additional Information for filing with the SEC; (vii) all expenses
of meetings of Trustees and of shareholders of the Trust and of preparing,
printing and distributing prospectuses, notices, proxy statements and all
reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal counsel to the Trust; (ix) compensation of Trustees of the
Trust; and (x) interest on borrowed money, if any.
4. COMPENSATION OF THE ADVISOR.
a) As compensation for the services rendered and obligations assumed
hereunder by the Advisor, the Trust shall pay to the Advisor
monthly a fee that is equal on an annual basis to that percentage
of the average daily net assets of each Fund set forth on
Schedule 1 attached hereto (and with respect to any future Fund,
such percentage as the Trust and the Advisor may agree to from
time to time). Such fee shall be computed and accrued daily. If
the Advisor serves as investment advisor for less than the whole
of any period specified in this Section 4a, the compensation to
the Advisor shall be prorated. For purposes of calculating the
Advisor's fee, the daily value of each Fund's net assets shall be
computed by the same method as the Trust uses to compute the net
asset value of that Fund.
b) The Advisor will pay all fees owing to each Sub-Advisor, and the
Trust shall not be obligated to the Sub-Advisors in any manner
with respect to the compensation of such Sub-Advisors.
c) The Advisor reserves the right to waive all or a part of its fee.
5. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the Trust
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. It is understood that the Trustees and
officers of the Trust are or may become interested in the Advisor as
stockholders, officers or otherwise, and that stockholders and officers of the
Advisor are or may become similarly interested in the Trust, and that the
Advisor may become interested in the Trust as a shareholder or otherwise.
6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; except that the Trust may use
such name in any document which merely refers in accurate terms to its
appointment hereunder or in any situation which is required by the SEC or a
state securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Advisor will not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; except that the Advisor may use such name in any document
which merely refers in accurate terms to the appointment of the Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission. In all other cases, the parties may use such names to the extent
that the use is approved by the party named, it being agreed that in no event
shall such approval be unreasonably withheld.
The Trustees of the Trust acknowledge that the Advisor has reserved
for itself the rights to the name "Touchstone Strategic Trust" (or any similar
names) and that use by the Trust of such name shall continue only with the
continuing consent of the Advisor, which consent may be withdrawn at any time,
effective immediately, upon written notice thereof to the Trust.
7. LIMITATION OF LIABILITY OF THE ADVISOR.
a) Absent willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part
of the Advisor, the Advisor shall not be subject to liability to
the Trust or to any shareholder in any Fund for any act or
omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security. As used in this
Section 7, the term "Advisor" shall include Touchstone Advisors,
Inc. and/or any of its affiliates and the directors, officers and
employees of Touchstone Advisors, Inc. and/or any of its
affiliates.
b) The Trust will indemnify the Advisor against, and hold it
harmless from, any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses)
resulting from acts or omissions of the Trust. Indemnification
shall be made only after: (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that
the Trust was liable for the damages claimed or (ii) in the
absence of such a decision, a reasonable determination based upon
a review of the facts, that the Trust was liable for the damages
claimed, which determination shall be made by either (a) the vote
of a majority of a quorum of Trustees of the Trust who are
neither "interested persons" of the Trust nor parties to the
proceeding
("disinterested non-party Trustees") or (b) an independent legal
counsel satisfactory to the parties hereto, whose determination
shall be set forth in a written opinion. The Advisor shall be
entitled to advances from the Trust for payment of the reasonable
expenses incurred by it in connection with the matter as to which
it is seeking indemnification in the manner and to the fullest
extent that would be permissible under the applicable provisions
of the General Corporation Law of Ohio. The Advisor shall provide
to the Trust a written affirmation of its good faith belief that
the standard of conduct necessary for indemnification under such
law has been met and a written undertaking to repay any such
advance if it should ultimately be determined that the standard
of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (i) the Advisor
shall provide security in form and amount acceptable to the Trust
for its undertaking; (ii) the Trust is insured against losses
arising by reason of the advance; or (iii) a majority of a quorum
of the Trustees of the Trust, the members of which majority are
disinterested non-party Trustees, or independent legal counsel in
a written opinion, shall have determined, based on a review of
facts readily available to the Trust at the time the advance is
proposed to be made, that there is reason to believe that the
Advisor will ultimately be found to be entitled to
indemnification.
8. LIMITATION OF TRUST'S LIABILITY. The Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Advisor shall not seek satisfaction of any such obligation
from the holders of the shares of any Fund nor from any Trustee, officer,
employee or agent of the Trust.
9. FORCE MAJEURE. The Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
10. RENEWAL, TERMINATION AND AMENDMENT.
a) This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided, for a period of one year from the date
hereof and it shall continue indefinitely thereafter as to each
Fund, provided that such continuance is specifically approved by
the parties hereto and, in addition, at least annually by (i) the
vote of holders of a majority
of the outstanding voting securities of the affected Fund or by
vote of a majority of the Trust's Board of Trustees and (ii) by
the vote of a majority of the Trustees who are not parties to
this Agreement or interested persons of the Advisor, cast in
person at a meeting called for the purpose of voting on such
approval.
b) This Agreement may be terminated at any time, with respect to any
Fund(s), without payment of any penalty, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the affected Fund(s) upon 60 days' prior written
notice to the Advisor and by the Advisor upon 60 days' prior
written notice to the Trust.
c) This Agreement may be amended at any time by the parties hereto,
subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of any Fund
affected by such change. This Agreement shall terminate
automatically in the event of its assignment.
d) The terms "assignment," "interested persons" and "majority of the
outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Agreement and Declaration of Trust, dated as of November
18, 1982, the obligations of this Agreement are not binding upon any of the
Trustees or shareholders of the Trust individually, but bind only the Trust
estate.
TOUCHSTONE STRATEGIC TRUST
By:__________________________
Patrick T. Bannigan
President
TOUCHSTONE ADVISORS, INC.
By:__________________________
Michael S. Spangler
Vice President
SCHEDULE 1
LARGE CAP GROWTH FUND
The Fund pays the Advisor a fee equal to the annual rate of 0.75% on the first
$200 million of average daily net assets; 0.70% of the next $300 million of
average daily net assets; and 0.50% of such assets in excess of $500 million.
GROWTH OPPORTUNITIES FUND
The Fund pays the Advisor a fee equal to the annual rate of 1.00% on the first
$50 million of average daily net assets; 0.90% of the next $50 million of
average daily net assets; 0.80% of the next $100 million of average daily net
assets; and 0.75% of such assets in excess of $200 million.
International Equity Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.95% on the first
$100 million of average daily net assets; 0.90% of the next $100 million of
average daily net assets; 0.85% of the next $100 million of average daily net
assets; and 0.80% of such assets in excess of $300 million.
Emerging Growth Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.80% of average
daily net assets.
Enhanced 30 Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.65% on the first
$100 million of average daily net assets; 0.60% of the next $100 million of
average daily net assets; 0.55% of the next $100 million of average daily net
assets; and 0.50% of such assets in excess of $300 million.
Value Plus Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.75% on the first
$100 million of average daily net assets; 0.70% of the next $100 million of
average daily net assets; 0.65% of the next $100 million of average daily net
assets; and 0.60% of such assets in excess of $300 million.
Small Cap Growth Fund
The Fund pays the Advisor a fee equal to the annual rate of 1.25% of average
daily net assets.
APPENDIX C
FORM OF
SUB-ADVISORY AGREEMENT
LARGE CAP GROWTH FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of ___________, 2003 by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and NAVELLIER
MANAGEMENT, INC., a Delaware corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and Declaration of Trust dated November 18, 1982 and registered
as an open-end diversified management investment company under the Investment
Company Act of 1940 (the "1940 Act"), to provide investment advisory services to
the Growth Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it with
portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to the Sub-Advisor by the Advisor (the "Fund Assets"), subject to
the control and direction of the Advisor and the Trust's Board of Trustees, for
the period and on the terms hereinafter set forth. The Sub-Advisor hereby
accepts such employment and agrees during such period to render the services and
to perform the duties called for by this Agreement for the compensation herein
provided. The Sub-Advisor shall at all times maintain its registration as an
investment advisor under the Investment Advisers Act of 1940 and shall otherwise
comply in all material respects with all applicable laws and regulations, both
state and federal. The Sub-Advisor shall for all purposes herein be deemed an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust or the Fund.
2. DUTIES OF THE SUB-ADVISOR. The Sub-Advisor will provide the following
services and undertake the following duties:
a. The Sub-Advisor will manage the investment and reinvestment of
the assets of the Fund, subject to and in accordance with the
investment objectives, policies and restrictions of the Fund and any
directions which the Advisor or the Trust's Board of Trustees may give
from time to time with respect to the Fund. In furtherance of the
foregoing, the
Sub-Advisor will make all determinations with respect to the
investment of the assets of the Fund and the purchase and sale of
portfolio securities and shall take such steps as may be necessary or
advisable to implement the same. The Sub-Advisor also will determine
the manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the portfolio securities
will be exercised. The Sub-Advisor will render regular reports to the
Trust's Board of Trustees and to the Advisor (or such other advisor or
advisors as the Advisor shall engage to assist it in the evaluation of
the performance and activities of the Sub-Advisor). Such reports shall
be made in such form and manner and with respect to such matters
regarding the Fund and the Sub-Advisor as the Trust or the Advisor
shall from time to time request.
b. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not limited to:
(i) permission to use the Sub-Advisor's name as provided in Section 5,
(ii) permission to use the past performance and investment history of
the Sub-Advisor as the same is applicable to the Fund, (iii) access to
the individual(s) responsible for day-to-day management of the Fund
for marketing conferences, teleconferences and other activities
involving the promotion of the Fund, subject to the reasonable request
of the Advisor, (iv) permission to use biographical and historical
data of the Sub-Advisor and individual manager(s), and (v) permission
to use the names of clients to which the Sub-Advisor provides
investment management services, subject to any restrictions imposed by
clients on the use of such names.
c. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in accordance with the
policies with respect thereto set forth in the Trust's registration
statements under the 1940 Act and the Securities Act of 1933, as such
registration statements may be in effect from time to time. In
connection with the placement of orders for the execution of portfolio
transactions, the Sub-Advisor will create and maintain all necessary
brokerage records of the Fund in accordance with all applicable laws,
rules and regulations, including but not limited to records required
by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the
Securities and Exchange Commission (the "SEC"), the Trust or any
person retained by the Trust. Where applicable, such records shall be
maintained by the Advisor for the periods and in the places required
by Rule 31a-2 under the 1940 Act. When placing orders with brokers and
dealers, the Sub-Advisor's primary objective shall be to obtain the
most favorable price and execution available for the Fund, and in
placing such orders the Sub-Advisor may consider a number of factors,
including, without limitation, the overall direct net economic result
to the Fund (including commissions, which may not be the lowest
available but ordinarily should not be higher than the generally
prevailing competitive range), the financial strength and stability of
the broker, the efficiency with
which the transaction will be effected, the ability to effect the
transaction at all where a large block is involved and the
availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized,
to the extent authorized by law (including, without limitation,
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), to pay a broker or dealer who provides research
services to the Sub-Advisor an amount of commission for effecting a
portfolio transaction in excess of the amount of commission another
broker or dealer would have charged for effecting such transaction, in
recognition of such additional research services rendered by the
broker or dealer, but only if the Sub-Advisor determines in good faith
that the excess commission is reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer
viewed in terms of the particular transaction or the Sub-Advisor's
overall responsibilities with respect to discretionary accounts that
it manages, and that the Fund derives or will derive a reasonably
significant benefit from such research services. The Sub-Advisor will
present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such
expenses, broken down by broker-dealer and containing such information
as the Board of Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than
30 days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing services
to the Fund pursuant to this Agreement except such expenses as are
undertaken by the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the investment
and reinvestment of such assets so as to comply with the provisions of
the 1940 Act and with Subchapter M of the Internal Revenue Code of
1986, as amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.45% of the
average daily net assets up to $200 million, 0.40% of average net
assets from $200 million to $500 million and 0.20% of average net
assets over $500 million of the
Fund. Such fee shall be computed and accrued daily. If the Sub-Advisor
serves in such capacity for less than the whole of any period
specified in this Section 3a, the compensation to the Sub-Advisor
shall be prorated. For purposes of calculating the Sub-Advisor's fee,
the daily value of the Fund's net assets shall be computed by the same
method as the Trust uses to compute the net asset value of the Fund
for purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part of
its fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor may
perform investment advisory services for various other clients, including other
investment companies. The Sub-Advisor will report to the Board of Trustees of
the Trust (at regular quarterly meetings and at such other times as such Board
of Trustees reasonably shall request) (i) the financial condition and prospects
of the Sub-Advisor, (ii) the nature and amount of transactions affecting the
Fund that involve the Sub-Advisor and affiliates of the Sub-Advisor, (iii)
information regarding any potential conflicts of interest arising by reason of
its continuing provision of advisory services to the Fund and to its other
accounts, and (iv) such other information as the Board of Trustees shall
reasonably request regarding the Fund, the Fund's performance, the services
provided by the Sub-Advisor to the Fund as compared to its other accounts and
the plans of, and the capability of, the Sub-Advisor with respect to providing
future services to the Fund and its other accounts. At least annually, the
Sub-Advisor shall report to the Trustees the total number and type of such other
accounts and the approximate total asset value thereof (but not the identities
of the beneficial owners of such accounts). The Sub-Advisor agrees to submit to
the Trust a statement defining its policies with respect to the allocation of
business among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the Trust as
a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name of
the Sub-Advisor in any prospectus, sales literature or other material relating
to the Advisor or the Trust in any manner not approved in advance by the
Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses of
its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful misfeasance,
bad faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be subject
to liability to the Advisor, the Trust or to any shareholder in the Fund for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided for a period of two years from the
date hereof and it shall continue thereafter provided that such
continuance is specifically approved by the parties and, in addition,
at least annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the Fund or by
vote of a majority of the Trust's Board of Trustees and (ii) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of either the Advisor or the
Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without payment
of any penalty, (i) by the Advisor, by the Trust's Board of Trustees
or by a vote of the majority of the outstanding voting securities of
the Fund, in any such case upon not less than 60 days' prior written
notice to the Sub-Advisor and (ii) by the Sub-Advisor upon not less
than 60 days' prior written notice to the Advisor and the Trust. This
Agreement shall terminate automatically in the event of its
assignment.
c. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Fund affected by
such change.
d. The terms "assignment," "interested persons" and "majority of
the outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of the Advisor for
this purpose shall be 221 East Fourth Street, Suite 300, Cincinnati, Ohio 45202
and that the address of the Sub-Advisor shall be One East Liberty, Third Floor,
Reno, Nevada 89501.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: ________________________________________________
Name: Patrick Bannigan
Title: President
NAVELLIER MANAGEMENT, INC.
By: ________________________________________________
Name: Louis G. Navellier
Title: President
APPENDIX D
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1 FOR
CLASS A SHARES OF MULTIPLE CLASS SERIES
AND FOR SINGLE CLASS SERIES OF
COUNTRYWIDE STRATEGIC TRUST
WHEREAS, Countrywide Strategic Trust (the "Trust"), an unincorporated
business trust organized under the laws of The Commonwealth of Massachusetts, is
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub-Series (one of
which may be designated as Class A Shares), whereas other Series will operate
with a single class of Shares, which Shares will be considered for purposes of
this Plan as Class A Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class A Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class A Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees of
the Trust, the Trust may, directly or indirectly, engage in any activities
related to the distribution of Class A Shares, which activities may include, but
are not limited to, the following: (a) maintenance fees or other payments to the
Trust's principal underwriter and to securities dealers and others who are
engaged in the sale of Class A Shares and who may be advising shareholders of
the Trust regarding the purchase, sale or retention of Class A Shares; (b)
expenses of maintaining personnel (including personnel of organizations with
which the Trust has entered into agreements related to this Plan) who engage in
or support distribution of Class A Shares or who render shareholder support
services not otherwise provided by the Trust's transfer agent, including, but
not limited to, office space and equipment, telephone facilities and expenses,
answering routine inquiries regarding the Trust, processing shareholder
transactions, and providing such other shareholder services as the Trust may
reasonably request; (c) formulating and implementing of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
preparing, printing and distributing sales literature; (e) preparing, printing
and distributing prospectuses and statements of additional information and
reports of the Trust for recipients other than existing shareholders of the
Trust; and (f) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities listed above, and
in any other activities related to the distribution of Class A Shares, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made pursuant to this Plan
and the basis upon which payment of such expenditures will be made shall be
determined by the Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount calculated at the rate of .25% of the
average daily net asset value of the Class A Shares of any Series of the Trust.
Such payments for distribution activities may be made directly by the Class A
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class A Shares.
3. Term and Termination. This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a majority (as defined in the 1940 Act) of the outstanding Class A
Shares of such Series of the Trust. In the event this Plan is terminated by any
Series in accordance with its terms, the obligations of the Class A Shares of
such Series to make payments to the Trust's principal underwriter pursuant to
this Plan will cease and such Series will not be required to make any payments
for expenses incurred after the date of termination.
4. Amendments. This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures provided for in Section 2 hereof
unless such amendment is approved by a vote of the majority (as defined in the
1940 Act) of the outstanding Class A Shares of such Series, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 3 hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
6. Quarterly Reports. The Treasurer of the Trust and the principal
underwriter shall provide to the Trustees and the Trustees shall review, at
least quarterly, a written report of the amounts expended pursuant to this Plan
and any related agreement, the purposes for which such expenditures were made
and the allocation of such expenditures as provided for in Section 7.
7. Allocating Expenditures Between Classes. Only distribution expenditures
properly attributable to the sale of a particular class of Shares may be used to
support the distribution fee charged to shareholders of such class of Shares.
Distribution expenses attributable to the sale of more than one class of Shares
of a Series will be allocated at least annually to each class of Shares based
upon the ratio in which the sales of each class of Shares bears to the sales of
all the Shares of such Series. For this purpose, Shares issued upon reinvestment
of dividends or distributions will not be considered sales.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
9. Limitation of Liability. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of The Commonwealth of
Massachusetts and notice is hereby given that this Plan is executed on behalf of
the Trustees of the Trust as trustees and not individually and that the
obligations of this instrument are not binding upon the Trustees or shareholders
of the Trust individually but are binding only upon the assets and property of
the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the date
set forth below.
Dated: October 29, 1999
Attest:
/s/ Tina D. Hosking By: /s/ Robert H. Leshner
- ------------------------ --------------------------
Secretary President
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1 FOR
CLASS B SHARES OF TOUCHSTONE STRATEGIC TRUST
WHEREAS, Touchstone Strategic Trust (the "Trust"), an unincorporated
business trust organized under the laws of The Commonwealth of Massachusetts, is
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub-Series (one of
which may be designated as Class B Shares); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class B Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class B Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees of
the Trust, the Trust may, directly or indirectly, engage in any activities
related to the distribution of Class B Shares, which activities may include, but
are not limited to, the following: (a) maintenance fees or other payments to the
Trust's principal underwriter and to securities dealers and others who are
engaged in the sale of Class B Shares and who may be advising shareholders of
the Trust regarding the purchase, sale or retention of Class B Shares; (b)
expenses of maintaining personnel (including personnel of organizations with
which the Trust has entered into agreements related to this Plan) who engage in
or support distribution of Class B Shares or who render shareholder support
services not otherwise provided by the Trust's transfer agent, including, but
not limited to, office space and equipment, telephone facilities and expenses,
answering routine inquiries regarding the Trust, processing shareholder
transactions, and providing such other shareholder services as the Trust may
reasonably request; (c) formulating and implementing of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
preparing, printing and distributing sales literature; (e) preparing, printing
and distributing prospectuses and statements of additional information and
reports of the Trust for recipients other than existing shareholders of the
Trust; and (f) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities listed above, and
in any other activities related to the distribution of Class B Shares, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made pursuant to Section 1
and the basis upon which payment of such expenditures will be made shall be
determined by the Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount calculated at the rate of .75% of the
average daily net asset value of the Class B Shares of any Series of the Trust.
Such payments for distribution activities may be made directly by the Class B
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class B Shares.
3. Maintenance Fee. In addition to the payments of compensation provided
for in Section 2 and in order to further enhance the distribution of its Class B
Shares, the Trust shall pay the principal underwriter a maintenance fee, accrued
daily and paid monthly, in an amount equal to an annual rate of ..25% of the
daily net assets of the Class B Shares of the Trust. When requested by and at
the direction of the principal underwriter, the Trust shall pay a maintenance
fee to dealers based on the amount of Class B Shares sold by such dealers and
remaining outstanding for specified periods of time, if any, determined by the
principal underwriter, in amounts up to .25% per annum of the average daily net
assets of the Class B Shares of the Trust. Any maintenance fees paid to dealers
shall reduce the maintenance fees otherwise payable to the principal
underwriter.
4. Term and Termination. This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a majority (as defined in the 1940 Act) of the outstanding Class B
Shares of such Series of the Trust. In the event this Plan is terminated by any
Series in accordance with its terms, the obligations of the Class B Shares of
such Series to make payments to the Trust's principal underwriter pursuant to
this Plan will cease and such Series will not be required to make any payments
for expenses incurred after the date of termination.
5. Amendments. This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures provided for in Sections 2 and 3
hereof unless such amendment is approved by a vote of the majority (as defined
in the 1940 Act) of the outstanding Class B Shares of such Series, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 4 hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
7. Quarterly Reports. The principal underwriter and the Treasurer of the
Trust shall provide to the Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
any related agreement, the purposes for which such expenditures were made and
the allocation of such expenditures as provided for in Section 8.
8. Allocating Expenditures Between Classes. Only distribution expenditures
properly attributable to the sale of a particular class of Shares
may be used to support the distribution fee charged to shareholders of such
class of Shares. Distribution expenses attributable to the sale of more than one
class of Shares of a Series will be allocated at least annually to each class of
Shares based upon the ratio in which the sales of each class of Shares bears to
the sales of all the Shares of such Series. For this purpose, Shares issued upon
reinvestment of dividends or distributions will not be considered sales.
9. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
10. Limitation of Liability. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of The Commonwealth of
Massachusetts and notice is hereby given that this Plan is executed on behalf of
the Trustees of the Trust as trustees and not individually and that the
obligations of this instrument are not binding upon the Trustees or shareholders
of the Trust individually but are binding only upon the assets and property of
the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.
Dated: May 1, 2001
Attest:
/s/ Tina D. Hosking By: /s/ Jill McGruder
- ---------------------- ---------------------
Secretary President
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1 FOR
CLASS C SHARES OF COUNTRYWIDE STRATEGIC TRUST
WHEREAS, Countrywide Strategic Trust (the "Trust"), an unincorporated
business trust organized under the laws of The Commonwealth of Massachusetts, is
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trust issues shares of certain Series in Sub-Series (one of
which may be designated as Class C Shares); and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Class C Shares, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the current Rule 12b-1 distribution plan of each Series is
hereby amended as it pertains to the Class C Shares of each Series in accordance
with Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees of
the Trust, the Trust may, directly or indirectly, engage in any activities
related to the distribution of Class C Shares, which activities may include, but
are not limited to, the following: (a) maintenance fees or other payments to the
Trust's principal underwriter and to securities dealers and others who are
engaged in the sale of Class C Shares and who may be advising shareholders of
the Trust regarding the purchase, sale or retention of Class C Shares; (b)
expenses of maintaining personnel (including personnel of organizations with
which the Trust has entered into agreements related to this Plan) who engage in
or support distribution of Class C Shares or who render shareholder support
services not otherwise provided by the Trust's transfer agent, including, but
not limited to, office space and equipment, telephone facilities and expenses,
answering routine inquiries regarding the Trust, processing shareholder
transactions, and providing such other shareholder services as the Trust may
reasonably request; (c) formulating and implementing of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (d)
preparing, printing and distributing sales literature; (e) preparing, printing
and distributing prospectuses and statements of additional information and
reports of the Trust for recipients other than existing shareholders of the
Trust; and (f) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities listed above, and
in any other activities related to the distribution of Class C Shares, either
directly or through other persons with which the Trust has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made pursuant to Section 1
and the basis upon which payment of such expenditures will be made shall be
determined by the Trustees of the Trust, but in no event may such expenditures
exceed in any fiscal year an amount calculated at the rate of .75% of the
average daily net asset value of the Class C Shares of any Series of the Trust.
Such payments for distribution activities may be made directly by the Class C
Shares or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from the Class C Shares.
3. Maintenance Fee. In addition to the payments of compensation provided
for in Section 2 and in order to further enhance the distribution of its Class C
Shares, the Trust shall pay the principal underwriter a maintenance fee, accrued
daily and paid monthly, in an amount equal to an annual rate of ..25% of the
daily net assets of the Class C Shares of the Trust. When requested by and at
the direction of the principal underwriter, the Trust shall pay a maintenance
fee to dealers based on the amount of Class C Shares sold by such dealers and
remaining outstanding for specified periods of time, if any, determined by the
principal underwriter, in amounts up to .25% per annum of the average daily net
assets of the Class C Shares of the Trust. Any maintenance fees paid to dealers
shall reduce the maintenance fees otherwise payable to the principal
underwriter.
4. Term and Termination. This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval. This Plan may be terminated with respect
to any Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a majority (as defined in the 1940 Act) of the outstanding Class C
Shares of such Series of the Trust. In the event this Plan is terminated by any
Series in accordance with its terms, the obligations of the Class C Shares of
such Series to make payments to the Trust's principal underwriter pursuant to
this Plan will cease and such Series will not be required to make any payments
for expenses incurred after the date of termination.
5. Amendments. This Plan may not be amended with respect to any Series to
increase materially the amount of expenditures provided for in Sections 2 and 3
hereof unless such amendment is approved by a vote of the majority (as defined
in the 1940 Act) of the outstanding Class C Shares of such Series, and no
material amendment to this Plan shall be made unless approved in the manner
provided for annual renewal of this Plan in Section 4 hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of Trustees who are not interested persons (as defined
in the 1940 Act) of the Trust shall be committed to the discretion of the
Trustees who are not interested persons of the Trust.
7. Quarterly Reports. The principal underwriter and the Treasurer of the
Trust shall provide to the Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
any related agreement, the purposes for which such expenditures were made and
the allocation of such expenditures as provided for in Section 8.
8. Allocating Expenditures Between Classes. Only distribution expenditures
properly attributable to the sale of a particular class of Shares may be used to
support the distribution fee charged to shareholders of such class of Shares.
Distribution expenses attributable to the sale of more than one class of Shares
of a Series will be allocated at least annually to each class of Shares based
upon the ratio in which the sales of each class of Shares bears to the sales of
all the Shares of such Series. For this purpose, Shares issued upon reinvestment
of dividends or distributions will not be considered sales.
9. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
10. Limitation of Liability. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of The Commonwealth of
Massachusetts and notice is hereby given that this Plan is executed on behalf of
the Trustees of the Trust as trustees and not individually and that the
obligations of this instrument are not binding upon the Trustees or shareholders
of the Trust individually but are binding only upon the assets and property of
the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of the
date set forth below.
Dated: October 29, 1999
Attest:
/s/ Tina D. Hosking By: /s/ Robert H. Leshner
- -------------------------- -------------------------
Secretary President
PART B
TOUCHSTONE STRATEGIC TRUST
(THE LARGE CAP GROWTH FUND)
STATEMENT OF ADDITIONAL INFORMATION
DATED August 13, 2003July 18, 2003
This Statement of Additional Information, which is not a prospectus, should
be read in conjunction with the Combined Prospectus/Proxy Statement of
Touchstone Strategic Trust (the "Fund"), dated July 18, 2003 for the special
meeting (the "Meeting") of the shareholders of the Navellier Large Cap Growth
Portfolio (the "Portfolio") of the Navellier Performance Funds and for the
special meeting (the "Millennium Meeting") of the Shareholders of the Navellier
Large Cap Growth Portfolio of the Navellier Millennium Funds, a copy of which
Prospectus/ Proxy Statement may be obtained, without charge, by contacting the
Portfolio or the Millennium Portfolio, at their mailing address c/o Navellier
Securities Corp., One East Liberty, Third Floor, Reno, Nevada 89501; Tel:
1-800-887-8671. This Statement of Additional Information contains additional and
more detailed information about the operations and activities of the Large Cap
Growth Fund, a portfolio of the Touchstone Strategic Trust (the "Acquiring
Fund") and the operations and activities of the Portfolio and the Millennium
Portfolio.
The combined Prospectus/Proxy Statement describes certain transactions
contemplated by the proposed merger of the Portfolio and of the Millennium
Portfolio into the Acquiring Fund (the "Reorganization") whereby the Acquiring
Fund would acquire all of the assets of the Portfolio and of the Millennium
Portfolio in exchange solely for shares of beneficial interest in the Acquiring
Fund and the assumption by the Acquiring Fund of all of the valid liabilities of
the Portfolio and of the Millennium Portfolio.
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PROSPECTUS OF TOUCHSTONE STRATEGIC TRUST DATED AUGUST 1, 2003 (incorporated
herein by reference to Registrant's August 1, 2003 N-1A post-effective amendment
No. 49 EDGAR filing)..............................
STATEMENT OF ADDITIONAL INFORMATION FOR TOUCHSTONE STRATEGIC TRUST DATED AUGUST
1, 2003 (incorporated herein by reference to Registrant's August 1, 2003 N-1A
post-effective amendment No. 49 EDGAR filing).......
PROSPECTUS OF THE NAVELLIER PERFORMANCE FUNDS DATED MAY 1, 2003 (incorporated
herein by reference to the April 30, 2003 filing on form N-1A by the Navellier
Performance Funds, post-effective amendment No. 25 EDGAR filing
STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER PERFORMANCE FUNDS DATED
MAY 1, 2003 (incorporated herein by reference to the April 30, 2003 filing on
form N-1A by the Navellier Performance Funds, post-effective amendment No. 25
EDGAR filing)
PROSPECTUS OF THE NAVELLIER MILLENNIUM FUNDS DATED MAY 1, 2003 (incorporated
herein by reference to the April 30, 2003 filing on form N-1A by The Navellier
Millennium Funds, post-effective amendment No. 9 EDGAR filing)
STATEMENT OF ADDITIONAL INFORMATION FOR THE NAVELLIER MILLENNIUM FUNDS DATED MAY
1, 2003 (incorporated by reference to the April 30, 2003 filing on form N-1A by
The Navellier Millennium Funds post-effective amendment No. 9 EDGAR filing)
CURRENT AUDITED ANNUAL REPORT OF TOUCHSTONE STRATEGIC TRUST AS OF MARCH 31, 2003
(incorporated by reference to the March 31, 2002 filing on form N-1A
post-effective amendment No. 49 EDGAR filing)
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER PERFORMANCE FUNDS AS OF DECEMBER
31, 2002 (incorporated herein by reference to the April 30, 2003 filing on form
N-1A post effective amendment No. 25 EDGAR filing).......
CURRENT AUDITED ANNUAL REPORT OF THE NAVELLIER MILLENNIUM FUNDS AS OF DECEMBER
31, 2002 (incorporated herein by reference to the April 30, 2003 filing on form
N-1A post effective amendment No. 9 EDGAR filing)................
Pro Forma Financial
Statements.....................................................................
NAVELLIER PERFORMANCE FUNDS' LARGE CAP GROWTH PORTFOLIO
AND
NAVELLIER MILLENNIUM FUNDS' LARGE CAP GROWTH PORTFOLIO
AND
TOUCHSTONE STRATEGIC TRUST'S LARGE CAP GROWTH FUND
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
December 31, 2002
PORTFOLIO OF INVESTMENTS
DECEMBER 31,2002
(UNAUDITED)
TST NAVELLIER MILLENNIUM NAVELLIER PERFORMANCE(A)
LARGE CAP GROWTH FUND LARGE CAP VALUE PORTFOLIO LARGE CAP GROWTH PORTFOLIO
SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE
------------------------- ------------------------- --------------------------
COMMON STOCKS AND EQUITY INTERESTS
BASIC MATERIALS
Semiconductors and Related
Applied Materials, Inc. - - 2,830 36,874 37,700 491,231
--------- ------- ----------
ENERGY
Oilfield Equipment
BJ Services Co. 27,100 875,601 - - - -
Weatherford Intl Ltd 10,600 423,258 - - - -
--------- ------- ----------
1,298,859 - - - -
INDUSTRIAL
Industrial Diversified
3M Co. 4,650 573,345 - - - -
--------- ------- ----------
CONSUMER, CYCLICAL
Automotive
Nissan Motor Co. Ltd. - - 1,770 27,223 24,800 381,424
--------- ------- ----------
Entertainment
Fox Entertainment Group, Inc. - - 1,120 29,042 17,125 444,051
--------- ------- ----------
Media Publishing
Viacom Inc. - Class A 22,250 908,023 - - - -
--------- ------- ----------
Other Recreation
Harley-Davidson, Inc. 19,200 887,040 585 27,027 8,500 392,700
--------- ------- ----------
Restaurants
Darden Restaurants Inc. 22,450 459,102 - - - -
--------- ------- ----------
Retailers, Apparel
Nike - - 170 7,560 9,800 137,857
--------- ------- ----------
Retailers, Broadline
Kohls Corp 15,850 886,807 310 17,345 4,050 226,598
Walgreen Co. 20,000 583,800 - - - -
The TJX Companies, Inc. - - 1,580 30,842 19,000 370,880
Wal-Mart Stores, Inc. 22,750 1,149,10 555 28,032 9,500 479,845
--------- ------- ----------
2,619,710 76,219 1,077,323
Retailers, Specialty
Bed Bath & Beyond Inc. 28,050 968,567 510 17,610 7,975 275,377
Lowe's Companies, Inc. 25,000 937,500 500 18,750 6,700 251,250
Staples, Inc. 27,200 497,760 - - - -
--------- ------- ----------
2,403,827 36,360 526,627
CONSUMER, NON-CYCLICAL
Food, Beverage and Tobacco
Sysco Corp. - - 590 17,576 8,775 261,407
Wm. Wrigley Jr. Co. - - 360 19,757 5,500 301,840
Anheuser-Busch Co., Inc. 8,000 387,200 - - - -
Pepsico, Inc. 14,300 603,746 - - - -
--------- ------- ----------
990,946 37,333 563,247
Consumer Products and Services
The Clorox Co. - - 735 30,319 10,000 412,500
eBay, Inc. - - 640 43,405 8,550 579,861
Apollo Group Inc. 13,850 609,400 - - - -
--------- ------- ----------
609,400 73,724 992,361
Food Retailers
Whole Foods Market Inc. 8,000 421,840 - - - -
--------- ------- ----------
(A) Neither the Navallier Performance Large Cap Growth Fund or the Navallier
Millennium Large Cap Growth Fund will be Required to sell current holdings
to cause the consummation of the Reorganization.
PRO FORMA TST
ADJUSTMENTS LARGE CAP GROWTH FUND(A)
SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE
------------------------ ---------------------------
COMMON STOCKS AND EQUITY INTEREST
BASIC MATERIALS
Semiconductors and Related
Applied Materials, Inc. - - 40,530 528,105
---------
ENERGY
Oilfield Equipment
BJ Services Co. - - 27,100 875,601
Weatherford Intl Ltd - - 10,600 423,258
- - ---------
- 1,298,859
INDUSTRIAL
Industrial Diversified
3M Co. - - 4,650 573,345
---------
CONSUMER, CYCLICAL
Automotive
Nissan Motor Co. Ltd. - - 26,570 408,647
---------
Entertainment
Fox Entertainment Group, Inc - - 18,245 473,093
---------
Media Publishing
Viacom Inc. - Class A - - 22,250 908,023
---------
Other Recreation
Harley-Davidson, Inc. - - 28,285 1,306,767
---------
Restaurants
Darden Restaurants Inc. - - 22,450 459,102
---------
Retailers, Apparel
Nike - - 9,970 145,417
---------
Retailers, Broadline
Kohls Corp - - 20,210 1,130,750
Walgreen Co. - - 20,000 583,800
The TJX Companies, Inc. - - 20,580 401,722
Wal-Mart Stores, Inc. - - 32,805 1,656,980
---------
3,773,252
Retailers, Specialty
Bed Bath & Beyond Inc. - - 36,535 1,261,554
Lowe's Companies, Inc. - - 32,200 1,207,500
Staples, Inc. - - 27,200 497,760
---------
- - 2,966,814
CONSUMER, NON-CYCLICAL
Food, Beverage and Tobacco
Sysco Corp. - - 9,365 278,983
Wm. Wrigley Jr. Co. - - 5,860 321,597
Anheuser-Busch Co., Inc. - - 8,000 387,200
Pepsico, Inc. - - 14,300 603,746
---------
1,591,526
Consumer Products and Services
The Clorox Co. - - 10,735 442,819
eBay, Inc. - - 9,190 623,266
Apollo Group Inc. - - 13,850 609,400
---------
1,675,485
Food Retailers
Whole Foods Market Inc. - - 8,000 421,840
---------
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
(UNAUDITED)
TST NAVELLIER MILLENNIUM NAVELLIER PERFORMANCE
LARGE CAP GROWTH FUND LARGE CAP VALUE PORTFOLIO LARGE CAP GROWTH PORTFOLIO
SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE
------------------------ ------------------------- --------------------------
Health Care Providers
Tenet Healthcare Corp. 25,800 423,120 - - - -
--------- ---------- ---------
Healthcare Products and Services
Forest Laboratories, Inc. - - 365 35,850 4,825 473,912
Johnson & Johnson - - 415 22,290 7,200 386,712
--------- ---------- ---------
- 58,140 860,624
Household Products (Non-Durable)
Colgate-Palmolive Co. 18,700 980,441 - - - -
Procter & Gamble Company 6,850 588,689 - - - -
--------- ---------- ---------
1,569,130 - -
Medical Supplies
Stryker Corp. 460 30,875 4,550 305,396
Cardinal Health Inc. 18,300 1,083,177 - - - -
Medtronic Inc. 28,800 1,313,280 - - - -
--------- ---------- ---------
2,396,457 30,875 305,396
Pharmaceuticals
Amgen, Inc. 25,000 1,208,500 - - - -
Caremark Rx Inc. 43,500 706,875 - - - -
Johnson & Johnson 21,250 1,141,337 - - - -
Lilly (Eli) & Co. 8,800 558,800 - - - -
Pfizer, Inc. 40,800 1,247,256 - - - -
--------- ---------- ---------
4,862,768 - -
TECHNOLOGY
Computer Equipment
Cisco Systems, Inc. - - 1,800 23,580 23,875 312,762
Dell Computer Corp. - - 1,690 45,191 28,500 762,090
Emulex Corp. - - 900 16,695 15,100 280,105
Hewlett-Packard Co. - - 1,375 23,870 18,375 318,990
International Business
Machines Corp. - - 575 44,563 7,500 581,250
--------- ---------- ---------
- 153,899 2,255,197
Computers & Information
Dell Computer Corp 29,900 799,526 - - - -
SEI Investments 30,400 826,272 - - - -
The Bisys Group, Inc. 32,150 511,185 - - - -
--------- ---------- ---------
2,136,983 - -
Semiconductor & Related
Intel Corp. 31,100 484,227 - - - -
Qlogic Corporation 18,000 621,180 - - - -
--------- ---------- ---------
1,105,407 - -
PROFORMA TST
ADJUSTMENTS LARGE CAP GROWTH FUND(A)
SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE
------------------------ ------------------------
Health Care Providers
Tenet Healthcare Corp. - - 25,800 $ 423,120
----------
Healthcare Products and Services
Forest Laboratories, Inc. - - 5,190 509,762
Johnson & Johnson - - 7,615 409,002
----------
- - 918,764
Household Products (Non-Durable)
Colgate-Palmolive Co. - - 18,700 980,441
Procter & Gamble Company - - 6,850 588,689
----------
- - 1,569,130
Medical Supplies
Stryker Corp. - - 5,010 336,271
Cardinal Health Inc. - - 18,300 1,083,177
Medtronic Inc. - - 28,800 1,313,280
----------
- - 2,732,728
Pharmaceuticals
Amgen, Inc. - - 25,000 1,208,500
Caremark Rx Inc. - - 43,500 706,875
Johnson & Johnson - - 21,250 1,141,337
Lilly (Eli) & Co. - - 8,800 558,800
Pfizer, Inc. - - 40,800 1,247,256
----------
- - 4,862,768
TECHNOLOGY
Computer Equipment
Cisco Systems, Inc. - - 25,675 336,342
Dell Computer Corp. - - 30,190 807,281
Emulex Corp. - - 16,000 296,800
Hewlett-Packard Co. - - 19,750 342,860
International Business
Machines Corp. - - 8,075 625,813
----------
- - 2,409,096
Computers & Information
Dell Computer Corp - - 29,900 799,526
SEI Investments - - 30,400 826,272
The Bisys Group, Inc. - - 32,150 511,185
----------
- - 2,136,983
Semiconductor & Related
Intel Corp. - - 31,100 484,227
Qlogic Corporation - - 18,000 621,180
----------
- - 1,105,407
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2002
(UNAUDITED)
TST NAVELLIER MILLENNIUM NAVELLIER PERFORMANCE
LARGE CAP GROWTH FUND LARGE CAP VALUE PORTFOLIO LARGE CAP GROWTH PORTFOLIO
SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE
------------------------ ------------------------- --------------------------
Software & Processing
Yahoo! Inc. - 1,450 23,707 19,325 315,964
Affiliated Computer Svcs. 21,100 1,110,915 - - - -
Cisco Systems, Inc. 95,900 1,256,290 - - - -
First Data Corp. 15,000 531,150 820 29,036 12,275 434,658
Intuit Inc. 11,000 516,120 810 38,005 10,875 510,255
Microsoft Corp. 29,350 1,517,395 520 26,884 8,350 431,695
Sungard Data Systems 44,450 1,047,242 - - - -
Veritas Software Corp. 30,250 472,505 - - - -
---------- ----------- ----------
6,451,617 117,632 1,692,572
Telecommunications Equipment and Services
Nextel Communications, Inc. - - 3,150 36,383 42,275 488,276
QUALCOMM, Inc. - - 1,170 42,576 15,900 578,601
---------- ----------- ----------
- 78,959 1,066,877
FINANCIAL SERVICES
Banking, Major
Bank of New York Co., Inc. 29,900 716,404 - - - -
---------- ----------- ----------
716,404 - -
Financial Services, Diversified
Freddie Mac 22,500 1,328,625 - - - -
SLM Corp. 12,150 1,261,899 470 48,814 6,900 716,634
---------- ----------- ----------
2,590,524 48,814 716,634
Insurance
The Allstate Corp. - - - - 10,550 390,244
AFLAC, Inc. - - 660 24,413 - -
The Progressive Corp. - - 525 26,056 8,700 431,781
---------- ----------- ----------
- 50,469 822,025
Regional Banks
Fifth Third Bancorp 15,300 895,815 - - - -
---------- ----------- ----------
895,815 - -
CONGLOMERATES
Conglomerates
General Electric Co. 37,450 911,908 - - -
---------- ----------- ----------
---------- ----------- ----------
TOTAL COMMON STOCKS AND EQUITY INTERESTS 35,232,225 890,150 12,726,146
---------- ----------- ----------
GOVERNMENT AGENCY OBLIGATIONS
FNMA Discount Notes, 1.25%, due 1/2/03 - - 104,000 103,993 - -
---------- ----------- ----------
CASH EQUIVALENTS
Money Market Fund
FBR Fund for Government Investors - - 887 887 1,189,273 1,189,273
---------- ----------- ----------
------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS AT MARKET 35,232,225 995,030 13,915,419
---------- ----------- ----------
TOTAL INVESTMENTS AT COST 42,106,795 1,052,830 14,796,893
---------- ----------- ----------
PRO FORMA TST
ADJUSTMENTS LARGE CAP GROWTH FUND(A)
SHARES/PAR MARKET VALUE SHARES/PAR MARKET VALUE
------------------------ ------------------------
Software & Processing
Yahoo! Inc. - - 20,775 $ 339,671
Affiliated Computer Svcs. - - 21,100 1,110,915
Cisco Systems, Inc. - - 95,900 1,256,290
First Data Corp. - - 28,095 994,844
Intuit Inc. - - 22,685 1,064,380
Microsoft Corp. - - 38,220 1,975,974
Sungard Data Systems - - 44,450 1,047,242
Veritas Software Corp. - - 30,250 472,505
------------
- - 8,261,821
Telecommunications Equipment and Services
Nextel Communications, Inc. - - 45,425 524,659
QUALCOMM, Inc. - - 17,070 621,177
------------
- - 1,145,836
FINANCIAL SERVICES
Banking, Major
Bank of New York Co., Inc. - - 29,900 716,404
------------
- - 716,404
Financial Services, Diversified
Freddie Mac - - 22,500 1,328,625
SLM Corp. - - 19,520 2,027,347
------------
- - 3,355,972
Insurance
The Allstate Corp. - - 10,550 390,244
AFLAC, Inc. - - 660 24,413
The Progressive Corp. - - 9,225 457,837
------------
- - 872,494
Regional Banks
Fifth Third Bancorp - - 15,300 895,815
------------
- - 895,815
CONGLOMERATES
Conglomerates
General Electric Co. - - 37,450 911,908
------------
------------
TOTAL COMMON STOCKS AND EQUITY INTERESTS 48,848,521
------------
GOVERNMENT AGENCY OBLIGATIONS
FNMA Discount Notes, 1.25%, due 1/2/03 - - 104,000 103,993
------------
CASH EQUIVALENTS
Money Market Fund
FBR Fund for Government Investors - - 1,190,160 1,190,160
------------
---------------------------------------------------------------------------------------------
TOTAL INVESTMENTS AT MARKET - $ 50,142,674
------- ------------
TOTAL INVESTMENTS AT COST - $ 57,956,518
------- ------------
- ---------------------
(A) Navellier Performance Large Cap Growth Portfolio is the accounting
survivor, however the surviving Fund name is TST Large Cap Growth Fund.
NAVELLIER PERFORMANCE LARGE CAP GROWTH PORTFOLIO
PRO FORMA COMBINING
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
(UNAUDITED)
PRO FORMA FINANCIAL STATEMENTS
Navellier Navellier
TST Millennium Performance TST
Large Cap Growth Large Cap Growth Large Cap Growth Pro Forma Large Cap Growth
Fund Portfolio Portfolio Adjustments Fund (A)
---------------- --------------- ---------------- ------------ ----------------
ASSETS
Investments, at cost $ 42,106,795 $ 1,052,830 $ 14,796,893 $ - $ 57,956,518
============= ============= ============= ============ =============
Investments, at market value $ 35,232,225 $ 995,030 $ 13,915,419 $ - $ 50,142,674
Receivable for securities sold 329,163 873 - - 330,036
Dividend and interest receivable 19,244 455 7,123 - 26,822
Other Assets 23,575 - 592 - 24,167
------------- ------------- ------------- ------------ -------------
Total Assets 35,604,206 996,358 13,923,134 - 50,523,698
------------- ------------- ------------- ------------ -------------
LIABILITIES
Payable for securities purchased 147,320 - - - 147,320
Bank overdraft 322,221 - - - 322,221
Payable for Fund shares repurchased 44,506 20 76,662 - 121,188
Advisory and distribution fees payable - 870 10,102 - 10,972
Accrued expenses and other liabilities 100,455 253 4,906 - 105,614
------------- ------------- ------------- ------------ -------------
Total Liabilities 614,501 1,143 91,670 - 707,314
------------- ------------- ------------- ------------ -------------
Net Assets $ 34,989,705 $ 995,215 $ 13,831,464 $ - $ 49,816,384
============= ============= ============= ============ =============
ANALYSIS OF NET ASSETS
Accumulated paid in capital $ 75,392,621 $ 1,471,568 $ 35,591,483 $ - 112,455,672
Distributions in excess of net investment
income (321,214) - - - (321,214)
Accumulated net realized loss on investments (33,207,132) (418,553) (20,878,545) - (54,504,230)
Unrealized depreciation of investments (6,874,570) (57,800) (881,474) - (7,813,844)
------------- ------------- ------------- ------------ -------------
Net Assets $ 34,989,705 $ 995,215 $ 13,831,464 $ - $ 49,816,384
============= ============= ============= ============ =============
BY CLASS:
NET ASSETS:
CLASS A $ 33,843,198 $ 355,316 $ 13,831,464 $ - $ 48,029,978
CLASS B 54,017 423,950 - - 477,967
CLASS C 1,092,490 215,949 - - 1,308,439
------------- ------------- ------------- ------------ -------------
$ 34,989,705 $ 995,215 $ 13,831,464 $ - $ 49,816,384
============= ============= ============= ============ =============
OUTSTANDING SHARES:
CLASS A 4,202,127 76,781 1,134,468 (1,473,452) 3,939,924
CLASS B 7,090 92,912 - (60,792) 39,210
CLASS C 143,907 47,449 - (84,019) 107,337
------------- ------------- ------------- ------------ -------------
4,353,124 217,142 1,134,468 (1,618,263) 4,086,471
============= ============= ============= ============ =============
NET ASSET VALUE PER SHARE:
CLASS A $ 8.05 $ 4.63 $ 12.19 $ 12.19
------------- ------------- ============= -------------
CLASS B $ 7.62 $ 4.56 $ 12.19
------------- ------------- -------------
CLASS C $ 7.59 $ 4.55 $ 12.19
------------- ------------- -------------
(A) The Navellier Performance Large Cap Growth Portfolio is the accounting
survivor, however the surviving Fund name and legal survivor is TST Large
Cap Growth.
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002
(UNAUDITED)
NAVELLIER NAVELLIER
TST MILLENNIUM PERFORMANCE
LARGE CAP GROWTH LARGE CAP VALUE LARGE CAP GROWTH
FUND FUND PORTFOLIO ADJUSTMENTS
---------------- --------------- ---------------- ------------
INVESTMENT INCOME
Dividend Income $ 238,986 $ 4,529 $ 103,515 $ -
Interest Income 20,792 1,574 5,063 -
------------ ------------ ------------ ------------
Total Income 259,778 6,103 108,578 -
------------ ------------ ------------ ------------
EXPENSES
Management fee 398,485 7,883 135,879 (168,624)(A)
Distribution Fees - Class A 129,171 789 40,440 (50,325)(A)
Distribution Fees - Class B 414 2,941 - 1,424 (A)
Distribution Fees - Class C 14,215 1,788 - (2,919)(A)
Administration fees 9,073 - 40,440 (22,114)(A)
Accounting fees 51,492 - - (27,492)(A)
Audit and legal fees 23,362 8,964 16,054 (18,380)(B)
Custodian fee 12,213 60,789 (E) 58,163 (E) (113,165)(B)
Directors/ Trustees fees 6,054 6,750 7,143 (13,893)(C)
Registration fees - 32,275 16,410 (48,685)(B)
Registration fees - Class A 7,890 - - -
Registration fees - Class B 11,404 - - -
Registration fees - Class C 11,611 - - -
Report Printing 29,175 1,729 15,569 (11,473)(B)
Transfer Agent Fees - Class A 32,639 - - 13,361 (A)
Transfer Agent Fees - Class B 12,049 - - (49)(A)
Transfer Agent Fees - Class C 11,983 - - 17 (A)
Other expense 35,462 1,156 24,692 (11,310)(D)
------------ ------------ ------------ ------------
796,692 125,064 354,790 (473,627)
Fees waived (Class A) (10,683) (43,852) (113,766) 73,346 (A)
Fees waived (Class B) (23,324) (40,973) - 42,881 (A)
Fees waived (Class C) (16,837) (24,868) - 19,751 (A)
------------- ------------ ------------ ------------
Total expenses, net of fees waived 745,848 15,371 241,024 (337,649)
-------------
------------ ------------ ------------
NET INVESTMENT INCOME (486,070) (9,268) (132,446) 337,649
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) on investments $(17,874,899) $ (126,421) $ (2,363,379) $ -
Change in unrealized appreciation (depreciation) (6,475,548) (100,611) (2,449,986) -
of investments - - - -
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (24,350,447) (227,032) (4,813,365) -
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $(24,836,518) $ (236,300) $ (4,945,811) $ 337,649
============ ============ ============ ============
TST (BASIS POINTS)
LARGE CAP GROWH PRO FORMA
FUND (F) COMBINED
------------------------------------
INVESTMENT INCOME
Dividend Income $ 347,030
Interest Income 27,429
------------
Total Income 374,459
------------
EXPENSES
Management fee 373,623 0.7500%
Distribution Fees - Class A 120,075 0.2410%
Distribution Fees - Class B 4,779 0.0096%
Distribution Fees - Class C 13,084 0.0263%
Administration fees 27,399 0.0550%
Accounting fees 24,000 0.0482%
Audit and legal fees 30,000 0.0602%
Custodian fee 18,000 0.0361%
Directors/ Trustees fees 6,054 0.0122%
Registration fees - 0.0000%
Registration fees - Class A 7,890 0.0158%
Registration fees - Class B 11,404 0.0229%
Registration fees - Class C 11,611 0.0233%
Report Printing 35,000 0.0703%
Transfer Agent Fees - Class A 46,000 0.0923%
Transfer Agent Fees - Class B 12,000 0.0241%
Transfer Agent Fees - Class C 12,000 0.0241%
Other expense 50,000 0.1004%
-------------------------------
802,919 1.6118%
Fees waived (Class A) (94,955) -0.1906%
Fees waived (Class B) (21,416) -0.0430%
Fees waived (Class C) (21,954) -0.0441%
-------------------------------
Total expenses, net of fees waived 664,594 1.3341%
-------------------------------
NET INVESTMENT INCOME (290,135)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) on investments $(20,364,699)
Change in unrealized appreciation (depreciation) (9,026,145)
of investments -
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (29,390,844)
------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $(29,680,980)
(A) Based on contract in effect for the legal surviving fund. Management Fee is
.75%. Distribution Fee is Class A .25%, Class B 1.00%, Class C 1.00%.
(B) Decrease due to the elimination of duplicative expenses achieved by merging
the funds.
(C) Based on director compensation plan for the legal surviving fund.
(D) Includes pricing, Insurance expense and T/A out-of-pocket fees.
(E) For Navellier funds includes Accounting, Custody and Transfer Agent fees.
(F) Navellier Performance Large Cap Growth Portfolio is the accounting
survivor, however the surviving Fund name is TST Large Cap Growth.
NAVELLIER PERFORMANCE FUNDS
LARGE CAP GROWTH PORTFOLIO
PRO FORMA NOTES TO COMBINING FINANCIAL STATEMENTS
DECEMBER 31, 2002
(UNAUDITED)
DESCRIPTION OF THE FUND
The Acquiring Fund, Navellier Performance Funds Large Cap Growth Portfolio,
is registered under the Investment Company Act of 1940, as amended, as an
open-end, non-diversified management company portfolio consisting of Class A
shares. The Target Funds, Navellier Millennium Large Cap Growth Portfolio and
Touchstone Strategic Trust Large Cap Growth Fund are registered under the
Investment Company Act of 1940, as amended, as an open-end, management
investment company. Navellier Millennium Large Cap Growth Portfolio, consisting
of Class A, B and C shares, is a non-diversified open-end management company.
Touchstone Strategic Large Cap Growth Fund, consisting of Class A, B and C
shares is a diversified open-end management company.
BASIS OF COMBINATION
The accompanying unaudited pro forma financial statements are presented to
show the effect of the transfer of assets and liabilities of the non-surviving
funds, the Navellier Millennium Funds Large Cap Value Portfolio and the
Touchstone Strategic Trust Large Cap Growth Fund, in exchange for shares of the
surviving fund (for purposes of maintaining the financial statements and
performance), the Navellier Performance Funds Large Cap Growth Portfolio.
Under the terms of the Plan of Reorganization, the combination of the
surviving and non-surviving funds will be accounted for by the method of
accounting for tax-free mergers of investment companies. The statement of assets
and liabilities and the related statement of operations of the surviving and
non-surviving funds have been combined as of and for the twelve months ended
December 31, 2002. In accordance with accounting principles generally accepted
in the United States, the historical cost of investment securities will be
carried forward to the surviving fund and the results of operations for
pre-combination periods of the surviving fund will not be restated.
At the time of the combination, the combined fund will change its name to
the Touchstone Strategic Trust Large Cap Growth Fund and shares of the surviving
fund will actually represent shares of the Navellier Performance Funds Large Cap
Growth Portfolio. Initially, the new Class B and Class C shares net asset values
will equal the Navellier Performance Funds Large Cap Growth Portfolio net asset
value. Performance history for the Class B and Class C shares
will not be carried forward from either of the existing target Funds Class B and
Class C shares, instead performance history will be initiated upon consummation
of the merger.
The accompanying pro forma financial statements should be read in
conjunction with the historical financial statements of the funds included or
incorporated by reference in the Statement of Additional Information.
PORTFOLIO VALUATION
Equity securities listed on national securities exchanges are valued at the
last sale price as of the close of business on the day the securities are being
valued. Over-the-counter securities are valued at the last sales price. Debt
securities with maturities of 60 days or less are valued at amortized cost. In
the absence of readily available market quotations, securities are valued at
fair value under procedures established by and under the general supervision of
the Board of Trustees.
CAPITAL SHARES
The pro forma net asset value per share assumes the issuance of shares of
Acquiring Fund that would have been issued at December 31, 2002, in connection
with the proposed reorganization. The number of shares assumed to be issued is
equal to the net asset value of shares of each Target Fund, as of December 31,
2002, divided by the net asset value per share of the shares of Acquiring Fund
as of December 31, 2002. The pro forma number of shares outstanding for the
combined fund consists of the following at December 31, 2002:
- ---------------------------------------------------------------------------
SHARES OF ADDITIONAL SHARES TOTAL OUTSTANDING
ACQUIRING FUND ASSUMED ISSUED SHARES
- ---------------------------------------------------------------------------
Pre-Combination In Reorganization Post-Combination
- ---------------------------------------------------------------------------
1,134,468 2,952,003 4,086,471
- ---------------------------------------------------------------------------
ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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.
FEDERAL INCOME TAXES
Each fund has elected to be taxed as a "regulated investment company" under
the Internal Revenue Code. After the acquisition, the Acquiring Fund intends to
continue to qualify as a regulated investment company, if such qualification is
in the best interest of its shareholders, by complying with the provisions
available to certain investment companies, as defined in applicable sections of
the Internal Revenue Code, and to make distributions of taxable income
sufficient to relieve it from all, or substantially all, Federal income taxes.
The identified cost of investments for the funds is substantially the same for
both financial accounting and Federal income tax purposes. The tax cost of
investments will remain unchanged for the combined fund.
TOUCHSTONE STRATEGIC TRUST
PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION
(a) Article VI of the Restated Agreement and Declaration of Trust of
Touchstone Strategic Trust (the "Registrant") provides for
indemnification of officers and Trustees as follows:
Section 6.4 Indemnification of Trustees, Officers, etc.
The Trust shall indemnify each of its Trustees and officers, including
persons who serve at the Trust's request as directors, officers or trustees
of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person") against all liabilities, including but not limited to amounts paid
in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by
any Covered Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with which such
person may be or may have been threatened, while in office or thereafter,
by reason of being or having been such a Trustee or Officer or Director and
except that no Covered Person shall be indemnified against any liability to
the Trust or its Shareholders to which such Covered Person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office ("disabling conduct"). Anything herein contained to the
contrary notwithstanding, no Covered Person shall be indemnified for any
liability to the Trust or its Shareholders to which such Covered Person
would otherwise be subject unless (1) a final decision on the merits is
made by a court or other body before whom the proceeding was brought that
the Covered Person to be indemnified was not liable by reason of disabling
conduct or, (2) in the absence of such a decision, a reasonable
determination is made, based upon a review of the facts, that the Covered
Person was not liable by reason of disabling conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither "interested persons" of
the Company as defined in the Investment Company Act of 1940 nor parties to
the proceeding ("disinterested, non-party Trustees"), or (b) an independent
legal counsel in a written opinion
Section 6.5 Advances of Expenses.
The Trust shall advance attorneys' fees or other expenses incurred by a
Covered Person in defending a proceeding, upon the undertaking by or on
behalf of the Covered Person to repay the advance unless it is ultimately
determined that such Covered Person is entitled to indemnification, so long
as one of the following conditions is met: (i) the Covered Person shall
provide security for his undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested non-party Trustees of the Trust,
or an independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there
is reason to believe that the Covered Person ultimately will be found
entitled to indemnification .
Section 6.6 Indemnification Not Exclusive, etc.
The right of indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered Person
may be entitled. As used in this Article VI, "Covered Person" shall include
such person's heirs, executors and administrators, an "interested Covered
Person" is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending or threatened, and a "disinterested"
person is a person against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened. Nothing
contained in this article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on behalf of any
such person.
(b) The Registrant maintains a mutual fund and investment advisory professional
and Trustees and officers liability policy. The policy provides coverage to
the Registrant, its trustees and officers, Touchstone Advisors, Inc.
("Touchstone") and sub-advisors. Coverage under the policy includes losses
by reason of any act error, omission, misstatement, misleading statement,
neglect or breach of duty. The Registrant may not pay for insurance which
protects the Trustees and officers against liabilities arising from action
involving willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their offices.
The Advisory Agreement and the Subadvisory Agreements provide that
Touchstone (or a Sub-advisor) shall not be liable for any act or omission
in the course of rendering services, absent willful misfeasance, bad faith
or gross negligence or reckless disregard by Touchstone (or a Sub-advisor)
of its obligations under the Agreement.
ITEM 16. EXHIBITS
(1) Declaration of Trust of Registrant.*
(2) By-Laws of Registrant.*
(3) Not applicable
(4) Agreement and Plan of Reorganization. (Filed herewith as Appendix A to
Part A)
(5) Specimen share certificate.*
(6) Advisory Agreement between the Large Cap Growth Fund (a portfolio of
the Touchstone Strategic Trust) and Touchstone Advisors, Inc. (Filed
herewith as Appendix B to Part A.)
(6)(a) Form of Sub-advisory Agreement between Touchstone Advisors, Inc. and
Navellier Management, Inc. if the merger is approved. (Filed herewith
as Appendix C to Part A.)
(6)(c) Form of management Contract*
(7) Form of Underwriting Agreement*
(8) Not applicable
(9) Custodian Agreements
(a) Custodian Agreement with Brown Brothers Harriman & Co. is filed
herewith.*
(b) Securities Lending Agreement with Brown Brothers Harriman & Co.
is filed herewith.*
(10) Rule 12b-1 Distribution Plan. Filed as Appendix D to Part A.
(11) Opinion of legal counsel regarding the legality of securities being
registered.(2)
(12) Opinion of legal counsel regarding certain tax matters and
consequences to shareholders discussed in Part A.(2)
(13) Not Applicable.
(14) Consent of Tait, Weller & Baker, independent auditors for The
Navellier Performance Funds and for Navellier Millennium Funds.(2)
(14)(a) Consent of Ernst & Young LLP, independent accountants for
Registrant.(2)
(15) Financial Statements Omitted Pursuant to Item 14(a)(1). [not
applicable]
(16) Powers of Attorney.*
(17) Not applicable.
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* Incorporated by reference to Registration Statement on Form N-1A or
subsequently filed Pre-Effective Amendment.
(2) Filed herewith.
ITEM 17 UNDERTAKINGS
(1) The Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of
this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) under the Securities
Act of 1933, as amended, the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The Registrant agrees that every prospectus that is filed under
paragraph (1), above, will be filed as part of an amendment to this
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment shall be deemed
to be a new registration statement for the securities offered therein,
and the offering of the securities at that time shall be deemed to be
the initial bona fide offering of them.
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TOUCHSTONE STRATEGIC TRUST
PART C. OTHER INFORMATION
ITEM 15. INDEMNIFICATION
(a) Article VI of the Restated Agreement and Declaration of Trust of Touchstone
Strategic Trust (the "Registrant") provides for indemnification of officers
and Trustees as follows:
Section 6.4 Indemnification of Trustees, Officers, etc.
The Trust shall indemnify each of its Trustees and officers, including
persons who serve at the Trust's request as directors, officers or trustees
of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred to as a "Covered
Person") against all liabilities, including but not limited to amounts paid
in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by
any Covered Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with which such
person may be or may have been threatened, while in office or thereafter,
by reason of being or having been such a Trustee or Officer or Director and
except that no Covered Person shall be indemnified against any liability to
the Trust or its Shareholders to which such Covered Person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office ("disabling conduct"). Anything herein contained to the
contrary notwithstanding, no Covered Person shall be indemnified for any
liability to the Trust or its Shareholders to which such Covered Person
would otherwise be subject unless (1) a final decision on the merits is
made by a court or other body before whom the proceeding was brought that
the Covered Person to be indemnified was not liable by reason of disabling
conduct or, (2) in the absence of such a decision, a reasonable
determination is made, based upon a review of the facts, that the Covered
Person was not liable by reason of disabling conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither "interested persons" of
the Company as defined in the Investment Company Act of 1940 nor parties to
the proceeding ("disinterested, non-party Trustees"), or (b) an independent
legal counsel in a written opinion
Section 6.5 Advances of Expenses.
The Trust shall advance attorneys' fees or other expenses incurred by a
Covered Person in defending a proceeding, upon the undertaking by or on
behalf of the Covered Person to repay the advance unless it is ultimately
determined that such Covered Person is entitled to indemnification, so long
as one of the following conditions is met: (i) the Covered Person shall
provide security for his undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the disinterested non-party Trustees of the Trust,
or an independent legal counsel in a written opinion, shall determine,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Covered
Person ultimately will be found entitled to indemnification.
Section 6.6 Indemnification Not Exclusive, etc.
The right of indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered Person
may be entitled. As used in this Article VI, "Covered Person" shall include
such person's heirs, executors and administrators, an "interested Covered
Person" is one against whom the action, suit or other proceeding in
question or another action, suit or other proceeding on the same or similar
grounds is then or has been pending or threatened, and a "disinterested"
person is a person against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending or threatened. Nothing
contained in this article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power
of the Trust to purchase and maintain liability insurance on behalf of any
such person.
(b) The Registrant maintains a mutual fund and investment advisory professional
and Trustees and officers liability policy. The policy provides coverage to
the Registrant, its trustees and officers, Touchstone Advisors, Inc.
("Touchstone") and sub-advisors. Coverage under the policy includes losses
by reason of any act error, omission, misstatement, misleading statement,
neglect or breach of duty. The Registrant may not pay for insurance which
protects the Trustees and officers against liabilities arising from action
involving willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their offices.
The Advisory Agreement and the Subadvisory Agreements provide that
Touchstone (or a Sub-advisor) shall not be liable for any act or omission
in the course of rendering services, absent willful misfeasance, bad faith
or gross negligence or reckless disregard by Touchstone (or a Sub-advisor)
of its obligations under the Agreement.
ITEM 16. EXHIBITS
(1) Amended Declaration of Trust of Registrant.*
(2) Amended By-Laws of Registrant.*
(3) Not applicable
(4) Agreement and Plan of Reorganization. (Filed herewith as Appendix A to
Part A)
(5) Specimen share certificate.*
(6) Advisory Agreement between the Large Cap Growth Fund (a portfolio of
the Touchstone Strategic Trust) and Touchstone Advisors, Inc. (Filed
herewith as Appendix B to Part A.)
(6)(a) Form of Sub-advisory Agreement between Touchstone Advisors, Inc. and
Navellier Management, Inc. if the merger is approved. (Filed herewith
as Appendix C to Part A.)
(7) Form of Underwriting Agreement.*
(8) Bonus, Profit Sharing, or Pension Plans.*
(9) Custodian Agreements
(a) Custodian Agreement with Brown Brothers Harriman & Co. is filed
herewith.*
(b) Securities Lending Agreement with Brown Brothers Harriman & Co.
is filed herewith.*
(10) Rule 12b-1 Distribution Plan. Filed as Appendix D to Part A.
(11) Opinion of legal counsel regarding the legality of securities being
registered.(2)
(12) Opinion of legal counsel regarding certain tax matters and
consequences to shareholders discussed in Part A.(2)
(13) Not Applicable.
(14) Consent of Tait, Weller & Baker, independent auditors for The
Navellier Performance Funds and for Navellier Millennium Funds.(2)
(14)(a) Consent of Ernst & Young LLP, independent accountants for
Registrant.(2)
(15) Financial Statements Omitted Pursuant to Item 14(a)(1). [not
applicable]
(16) Powers of Attorney.*
(17) Not applicable.
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* Incorporated by reference to Registration Statement on Form N-1A or
subsequently filed Pre-Effective Amendment.
(2) Filed herewith.
ITEM 17 UNDERTAKINGS
(1) The Registrant agrees that prior to any public reoffering of the securities
registered through the use of a prospectus which is part of this
Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) under the Securities Act of
1933, as amended, the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(2) The Registrant agrees that every prospectus that is filed under paragraph
(1), above, will be filed as part of an amendment to this Registration
Statement and will not be used until the amendment is effective, and that,
in determining any liability under the Securities Act of 1933, as amended,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
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SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of Cincinnati
and the State of Ohio, on the 13th day of August, 2003.
Registrant:
TOUCHSTONE STRATEGIC TRUST
By: /s/ Patrick T. Bannigan
---------------------------
Patrick T. Bannigan
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the 13th day of August, 2003.
/s/ Terrie A. Wiedenheft
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TERRIE A. WIEDENHEFT
* JOHN F. BARRETT Trustee
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* J. LELAND BREWSTER Trustee
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* WILLIAM O. COLEMAN Trustee
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* PHILLIP R. COX Trustee
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* H. JEROME LERNER Trustee
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* OSCAR P. ROBERTSON Trustee
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* ROBERT E. STAUTBERG Trustee
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*JOHN P. ZANOTTI Trustee
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*JILL T.MCGRUDER Trustee
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By: /s/ Tina D. Hosking
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Tina D.Hosking
*Attorney-in-Fact
July 31, 2003