UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3651
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Touchstone Strategic Trust
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(Exact name of registrant as specified in charter)
303 Broadway, Cincinnati, Ohio 45202
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(Address of principal executive offices) (Zip code)
Jill T. McGruder, 303 Broadway, Cincinnati, Ohio 45202
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(Name and address of agent for service)
Registrant's telephone number, including area code: (513) 878-4066
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Date of fiscal year end: 3/31
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Date of reporting period: 9/30/08
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Form N-CSR is to be used by management investment companies to file
reports with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Semiannual Report
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SEPTEMBER 30, 2008
(UNAUDITED)
Semi-Annual Report
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TOUCHSTONE STRATEGIC TRUST
Touchstone Diversified Small Cap Growth Fund
Touchstone Growth Opportunities Fund
Touchstone Large Cap Core Equity Fund
Touchstone Large Cap Growth Fund
Touchstone Large Cap Value Fund
Touchstone Micro Cap Growth Fund
Touchstone Mid Cap Growth Fund
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[LOGO] TOUCHSTONE (R)
INVESTMENTS
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Table of Contents
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Page
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Tabular Presentation of Portfolios of Investments 3-4
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Statements of Assets and Liabilities 5-8
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Statements of Operations 9-10
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Statements of Changes in Net Assets 11-14
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Financial Highlights 15-30
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Notes to Financial Statements 31-46
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Portfolios of Investments:
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Diversified Small Cap Growth Fund 47-48
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Growth Opportunities Fund 49
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Large Cap Core Equity Fund 50
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Large Cap Growth Fund 51
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Large Cap Value Fund 52
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Micro Cap Growth Fund 53
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Mid Cap Growth Fund 54-55
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Other Items 56-58
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2
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Tabular Presentation of Portfolios of Investments (Unaudited)
September 30, 2008
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The illustrations below provide each Fund's sector allocation. We hope it will
be useful to shareholders as it summarizes key information about each Fund's
investments.
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DIVERSIFIED SMALL CAP GROWTH FUND
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SECTOR ALLOCATION (% OF NET ASSETS)
Health Care 29.5
Information Technology 19.7
Industrials 16.1
Consumer Discretionary 11.9
Energy 8.3
Financials 5.3
Consumer Staples 3.0
Materials 2.3
Miscellaneous 1.3
Telecommunication Services 0.9
Utilities 0.5
Investment Funds 27.0
Other Assets/Liabilities (Net) (25.8)
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TOTAL 100.0
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LARGE CAP CORE EQUITY FUND
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SECTOR ALLOCATION (% OF NET ASSETS)
Information Technology 20.3
Financials 15.3
Industrials 14.5
Energy 12.4
Consumer Staples 11.8
Health Care 9.3
Consumer Discretionary 7.8
Utilities 2.9
Telecommunication Services 2.3
Materials 1.3
Investment Funds 11.8
Other Assets/Liabilities (Net) (9.7)
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TOTAL 100.0
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LARGE CAP VALUE FUND
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SECTOR ALLOCATION (% OF NET ASSETS)
Financials 28.2
Consumer Discretionary 24.0
Information Technology 17.6
Industrials 5.5
Telecommunication Services 5.4
Miscellaneous 4.3
Utilities 4.1
Energy 3.6
Health Care 3.4
Materials 1.5
Consumer Staples 1.2
Investment Funds 22.2
Other Assets/Liabilities (Net) (21.0)
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TOTAL 100.0
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GROWTH OPPORTUNITIES FUND
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SECTOR ALLOCATION (% OF NET ASSETS)
Health Care 28.6
Information Technology 28.4
Consumer Staples 11.7
Energy 8.4
Industrials 8.1
Consumer Discretionary 6.3
Materials 5.0
Financials 3.1
Investment Fund 25.0
Other Assets/Liabilities (Net) (24.6)
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TOTAL 100.0
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LARGE CAP GROWTH FUND
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SECTOR ALLOCATION (% OF NET ASSETS)
Consumer Staples 19.2
Health Care 18.2
Industrials 16.3
Information Technology 15.0
Consumer Discretionary 9.5
Financials 8.0
Materials 5.7
Energy 1.5
Investment Funds 25.0
Other Assets/Liabilities (Net) (18.4)
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TOTAL 100.0
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MICRO CAP GROWTH FUND
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SECTOR ALLOCATION (% OF NET ASSETS)
Information Technology 36.1
Health Care 23.4
Industrials 20.6
Financials 7.9
Energy 4.5
Consumer Discretionary 4.3
Materials 2.6
Utilities 0.2
Investment Funds 22.5
Other Assets/Liabilities (Net) (22.1)
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TOTAL 100.0
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3
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Tabular Presentation of Portfolios of Investments (Continued)
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MID CAP GROWTH FUND
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SECTOR ALLOCATION (% OF NET ASSETS)
Information Technology 22.2
Health Care 19.6
Industrials 13.9
Financials 12.9
Consumer Discretionary 11.3
Energy 10.7
Materials 4.6
Utilities 1.4
Consumer Staples 0.9
Investment Funds 27.4
Other Assets/Liabilities (Net) (24.9)
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TOTAL 100.0
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4
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Statements of Assets and Liabilities
September 30, 2008 (Unaudited)
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DIVERSIFIED LARGE
SMALL CAP GROWTH CAP CORE LARGE CAP
GROWTH OPPORTUNITIES EQUITY GROWTH
FUND FUND FUND FUND
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ASSETS
Investment securities:
At cost $ 41,986,046 $ 45,293,672 $ 78,175,662 $ 1,406,138,002
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Affiliated securities, at market value $ 891,083 $ -- $ 765,437 $ 61,852,304
Non-affiliated securities, at market value 37,789,285 45,285,960 74,240,992 1,331,033,327
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At market value - including $7,355,295, $9,313,955,
$7,612,685, and $200,601,064 of securities loaned for
the Diversified Small Cap Growth Fund, Growth
Opportunities Fund, Large Cap Core Equity Fund,
and Large Cap Growth Fund, respectively. $ 38,680,368 $ 45,285,960 $ 75,006,429 $ 1,392,885,631
Dividends and interest receivable 10,906 10,701 113,581 1,244,863
Receivable for capital shares sold 7,427 30,943 646 2,019,404
Receivable for securities sold 433,284 391,041 814,312 132,238,437
Receivable for securities lending income 24,368 2,480 3,013 173,316
Other assets 29,870 18,742 10,959 51,673
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TOTAL ASSETS 39,186,223 45,739,867 75,948,940 1,528,613,324
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LIABILITIES
Bank overdraft -- 69,739 -- --
Payable upon return of securities loaned 7,417,316 9,105,852 7,283,232 232,401,090
Payable for capital shares redeemed 107,748 112,025 196,798 5,220,090
Payable for securities purchased 839,592 -- -- 112,831,105
Payable to Advisor 25,673 33,040 37,778 701,989
Payable to other affiliates 25,527 21,707 17,074 359,037
Payable to Trustees 4,771 2,948 3,663 2,688
Other accrued expenses and liabilities 15,352 41,895 35,734 498,809
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TOTAL LIABILITIES 8,435,979 9,387,206 7,574,279 352,014,808
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NET ASSETS $ 30,750,244 $ 36,352,661 $ 68,374,661 $ 1,176,598,516
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NET ASSETS CONSIST OF:
Paid-in capital $ 48,733,591 $ 80,067,980 $ 68,277,163 $ 1,248,012,296
Accumulated net investment income (loss) (26,904) (234,874) 605,047 (34,836)
Accumulated net realized gains (losses) from security
transactions (14,650,765) (43,472,733) 2,661,684 (58,126,573)
Net unrealized depreciation on investments (3,305,678) (7,712) (3,169,233) (13,252,371)
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NET ASSETS $ 30,750,244 $ 36,352,661 $ 68,374,661 $ 1,176,598,516
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PRICING OF CLASS A SHARES
Net assets attributable to Class A shares $ 15,390,307 $ 25,266,735 $ 66,222,801 $ 687,287,814
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Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 1,652,724 1,311,829 6,835,057 32,747,654
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Net asset value and redemption price per share $ 9.31 $ 19.26 $ 9.69 $ 20.99
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Maximum offering price per share $ 9.88 $ 20.44 $ 10.28 $ 22.27
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PRICING OF CLASS B SHARES
Net assets attributable to Class B shares $ -- $ 1,744,315 $ -- $ 25,102,236
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Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) -- 96,907 -- 1,235,032
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Net asset value, offering price and redemption price
per share* $ -- $ 18.00 $ -- $ 20.33
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5
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Statements of Assets and Liabilities (Continued)
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DIVERSIFIED LARGE
SMALL CAP GROWTH CAP CORE LARGE CAP
GROWTH OPPORTUNITIES EQUITY GROWTH
FUND FUND FUND FUND
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PRICING OF CLASS C SHARES
Net assets attributable to Class C shares $ 3,294,161 $ 9,341,611 $ 2,151,860 $ 222,616,232
===================================================================================================================================
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 356,494 513,565 224,433 10,929,865
===================================================================================================================================
Net asset value, offering price and redemption price per
share* $ 9.24 $ 18.19 $ 9.59 $ 20.37
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PRICING OF CLASS Y SHARES
Net assets attributable to Class Y shares $ 12,065,776 $ -- $ -- $ 241,592,234
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Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 1,290,201 -- -- 11,415,227
===================================================================================================================================
Net asset value, offering price and redemption price per
share $ 9.35 $ -- $ -- $ 21.16
===================================================================================================================================
* Redemption price per share varies by length of time shares are held.
See accompanying notes to financial statements.
6
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Statements of Assets and Liabilities (Continued)
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LARGE CAP MICRO CAP MID CAP
VALUE GROWTH GROWTH
FUND FUND FUND
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ASSETS
Investment securities:
At cost $ 30,313,343 $ 26,921,670 $ 1,183,675,811
================================================================================================================================
Affiliated securities, at market value $ 561,915 $ 302,146 $ 39,021,344
Non-affiliated securities, at market value 17,233,518 32,389,374 1,113,917,251
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At market value - including $2,404,215, $5,789,946, and $219,673,700 of
securities loaned for the Large Cap Value Fund,
Micro Cap Growth Fund, and Mid Cap Growth Fund, respectively. $ 17,795,433 $ 32,691,520 $ 1,152,938,595
Dividends and interest receivable 7,768 1,426 1,028,676
Receivable for capital shares sold 5,975 680 1,275,841
Receivable for securities sold 996,444 249,552 12,001,988
Receivable for securities lending income 15,439 3,622 104,689
Other assets 14,173 20,291 57,114
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TOTAL ASSETS 18,835,232 32,967,091 1,167,406,903
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LIABILITIES
Bank overdrafts 100,979 249,552 --
Payable upon return of securities loaned 2,698,547 5,721,855 214,302,210
Payable for capital shares redeemed 106,356 133,723 9,761,828
Payable for securities purchased 1,171,044 -- 18,568,191
Payable to Advisor 11,581 25,922 659,699
Payable to other affiliates 9,219 23,673 453,615
Payable to Trustees 2,670 2,981 3,416
Other accrued expenses and liabilities 23,805 33,269 716,589
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TOTAL LIABILITIES 4,124,201 6,190,975 244,465,548
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NET ASSETS $ 14,711,031 $ 26,776,116 $ 922,941,355
================================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 50,646,681 $ 23,046,235 $ 952,366,500
Accumulated net investment income (loss) 157,181 (253,651) (2,674,751)
Accumulated net realized gains (losses) from security transactions (23,574,921) (1,786,318) 3,986,822
Net unrealized appreciation (depreciation) on investments (12,517,910) 5,769,850 (30,737,216)
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NET ASSETS $ 14,711,031 $ 26,776,116 $ 922,941,355
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PRICING OF CLASS A SHARES
Net assets attributable to Class A shares $ 10,299,188 $ 16,502,997 $ 605,598,793
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Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 3,039,213 1,673,412 31,690,577
================================================================================================================================
Net asset value and redemption price per share $ 3.39 $ 9.86 $ 19.11
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Maximum offering price per share $ 3.60 $ 10.46 $ 20.28
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PRICING OF CLASS B SHARES
Net assets attributable to Class B shares $ -- $ -- $ 51,856,238
================================================================================================================================
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) -- -- 3,179,101
================================================================================================================================
Net asset value, offering price and redemption price per share* $ -- $ -- $ 16.31
================================================================================================================================
7
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Statements of Assets and Liabilities (Continued)
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LARGE CAP MICRO CAP MID CAP
VALUE GROWTH GROWTH
FUND FUND FUND
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PRICING OF CLASS C SHARES
Net assets attributable to Class C shares $ 4,411,843 $ 10,037,024 $ 265,486,324
==================================================================================================================
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 1,315,910 1,049,558 16,258,568
==================================================================================================================
Net asset value, offering price and redemption price per share* $ 3.35 $ 9.56 $ 16.33
==================================================================================================================
PRICING OF CLASS Y SHARES
Net assets attributable to Class Y shares $ -- $ 236,095 $ --
==================================================================================================================
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) -- 23,457 --
==================================================================================================================
Net asset value, offering price and redemption price per share $ -- $ 10.07 $ --
==================================================================================================================
* Redemption price per share varies by length of time shares are held.
See accompanying notes to financial statements.
8
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Statements of Operations
For the Six Months Ended September 30, 2008 (Unaudited)
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DIVERSIFIED LARGE
SMALL CAP GROWTH CAP CORE LARGE CAP
GROWTH OPPORTUNITIES EQUITY GROWTH
FUND FUND FUND FUND
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INVESTMENT INCOME
Dividends from affiliated securities $ 14,109 $ 16,460 $ 17,429 $ 555,787
Dividends from non-affiliated securities (A) 61,045 108,379 843,149 6,680,185
Interest 85 3 103 492
Income from securities loaned 181,829 21,792 13,894 933,985
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TOTAL INVESTMENT INCOME 257,068 146,634 874,575 8,170,449
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EXPENSES
Investment advisory fees 214,588 213,475 267,473 4,073,444
Distribution expenses, Class A 28,530 36,505 99,585 985,132
Distribution expenses, Class B -- 10,446 -- 153,214
Distribution expenses, Class C 20,018 57,008 13,158 1,289,386
Administration fees 40,874 42,695 82,299 1,161,063
Transfer Agent fees, Class A 39,629 36,234 23,396 357,961
Transfer Agent fees, Class B -- 4,152 -- 23,090
Transfer Agent fees, Class C 9,036 14,033 4,695 121,097
Transfer Agent fees, Class Y 2,643 -- -- 5,247
Postage and supplies 9,119 19,511 10,108 94,378
Registration fees, Class A 15,704 6,424 5,912 18,365
Registration fees, Class B -- 3,395 -- 5,379
Registration fees, Class C 8,975 4,318 3,491 9,754
Registration fees, Class Y 8,582 -- -- 6,253
Reports to shareholders 2,107 7,979 3,869 73,660
Professional fees 9,907 10,560 11,708 39,388
Custodian fees -- 5,737 2,686 28,319
Trustees' fees and expenses 1,484 3,068 2,388 3,332
Compliance fees and expenses 329 501 677 2,221
Other expenses 566 1,185 1,473 27,029
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TOTAL EXPENSES 412,091 477,226 532,918 8,477,712
Fees waived by the Administrator (40,874) (42,695) (49,083) (272,427)
Fees waived and/or expenses reimbursed by the Advisor (87,127) (52,861) -- --
Fees Reduced by Custodian -- -- -- (7,589)
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NET EXPENSES 284,090 381,670 483,835 8,205,285
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NET INVESTMENT INCOME (LOSS) (27,022) (235,036) 390,740 (34,836)
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REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Net realized losses from security transactions (2,244,446) (2,315,284) (1,535,125) (31,108,201)
Net change in unrealized appreciation/
depreciation on investments 818,276 (2,301,665) (3,640,890) (161,755,021)
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NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS (1,426,170) (4,616,949) (5,176,015) (192,863,222)
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NET DECREASE IN NET ASSETS FROM OPERATIONS $ (1,453,192) $ (4,851,985) $ (4,785,275) $ (192,898,058)
============================================================================================================================
(A) Net of foreign tax withholding of: $ -- $ 660 $ -- $ 96,885
See accompanying notes to financial statements.
9
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Statements of Operations (Continued)
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LARGE CAP MICRO CAP MID CAP
VALUE GROWTH GROWTH
FUND FUND FUND
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INVESTMENT INCOME
Dividends from affiliated securities $ 10,240 $ 3,793 $ 602,219
Dividends from non-affiliated securities (A) 271,379 24,273 5,298,864
Interest 156 -- 315
Income from securities loaned 93,165 23,139 732,522
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TOTAL INVESTMENT INCOME 374,940 51,205 6,633,920
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EXPENSES
Investment advisory fees 104,259 204,698 4,278,732
Distribution expenses, Class A 24,726 25,094 865,917
Distribution expenses, Class B -- -- 314,691
Distribution expenses, Class C 40,107 61,712 1,570,059
Administration fees 27,802 32,752 1,069,688
Transfer Agent fees, Class A 11,873 28,356 436,607
Transfer Agent fees, Class B -- -- 53,801
Transfer Agent fees, Class C 12,047 18,908 233,493
Transfer Agent fees, Class Y -- 551 --
Postage and supplies 11,157 14,612 246,009
Reports to shareholders 4,517 10,772 101,098
Professional fees 10,156 10,495 47,630
Registration fees, Class A 8,333 4,783 15,548
Registration fees, Class B -- -- 5,288
Registration fees, Class C 6,791 3,431 8,915
Registration fees, Class Y -- 2,071 --
Custodian fees 1,737 4,854 33,602
Trustees' fees and expenses 3,229 2,970 2,797
Compliance fees and expenses 504 501 2,463
Other expenses 880 2,030 28,895
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TOTAL EXPENSES 268,118 428,590 9,315,233
Fees waived by the Administrator (27,802) (32,752) (6,562)
Fees waived and/or expenses reimbursed by the Advisor (22,557) (90,982) --
- -----------------------------------------------------------------------------------------------------------
NET EXPENSES 217,759 304,856 9,308,671
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NET INVESTMENT INCOME (LOSS) 157,181 (253,651) (2,674,751)
- -----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Net realized gains (losses) from security transactions (17,135,766) 2,449,517 4,353,376
Net change in unrealized appreciation/
depreciation on investments 2,931,285 (2,760,352) (104,118,734)
- -----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS (14,204,481) (310,835) (99,765,358)
- -----------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS $ (14,047,300) $ (564,486) $ (102,440,109)
===========================================================================================================
(A)Net of foreign tax withholding of: $ 41 $ -- $ 7,697
See accompanying notes to financial statements.
10
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Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
DIVERSIFIED GROWTH
SMALL CAP OPPORTUNITIES
GROWTH FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2008 MARCH 31, 2008 MARCH 31,
(UNAUDITED) 2008(A) (UNAUDITED) 2008
- -----------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss $ (27,022) $ (105,712) $ (235,036) $ (537,079)
Net realized gains (losses) from security transactions (2,244,446) 601,739 (2,315,284) 6,787,746
Net change in unrealized appreciation/depreciation on
investments 818,276 (3,667,836) (2,301,665) (2,959,595)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS (1,453,192) (3,171,809) (4,851,985) 3,291,072
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains, Class A -- (752,111) -- --
From net realized gains, Class C -- (2,212) -- --
From net realized gains, Class Y -- (631,432) -- --
- -----------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (1,385,755) -- --
- -----------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold 1,278,643 3,167,457 6,125,552 8,890,874
Reinvested distributions -- 744,007 -- --
Proceeds from shares issued in connection with acquisition(B) -- 16,787,855 -- --
Payments for shares redeemed (8,070,730) (1,092,663) (3,690,339) (20,930,319)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS A SHARE
TRANSACTIONS (6,792,087) 19,606,656 2,435,213 (12,039,445)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B
Proceeds from shares sold -- -- 44,984 144,930
Payments for shares redeemed -- -- (64,219) (568,213)
- -----------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM CLASS B SHARE TRANSACTIONS -- -- (19,235) (423,283)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
Proceeds from shares sold 28,791 30,668 753,189 1,718,568
Reinvested distributions -- 2,028 -- --
Proceeds from shares issued in connection with acquisition(B) -- 4,738,407 -- --
Payments for shares redeemed (810,242) (162,935) (1,402,523) (3,077,255)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS C SHARE
TRANSACTIONS (781,451) 4,608,168 (649,334) (1,358,687)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS Y
Proceeds from shares sold 309,081 153,398 -- --
Reinvested distributions -- 625,498 -- --
Proceeds from shares issued in connection with acquisition(B) -- 10,000,673 -- --
Payments for shares redeemed (2,223,656) (719,725) -- --
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS Y SHARE
TRANSACTIONS (1,914,575) 10,059,844 -- --
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (10,941,305) 29,717,104 (3,085,341) (10,530,343)
NET ASSETS
Beginning of period 41,691,549 11,974,445 39,438,002 49,968,345
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 30,750,244 $ 41,691,549 $ 36,352,661 $ 39,438,002
=============================================================================================================================
ACCUMULATED NET INVESTMENT LOSS $ (26,904) $ -- $ (234,874) $ --
=============================================================================================================================
(A) Class C represents the period from commencement of operations (August 1,
2007) through March 31, 2008.
(B) See Footnote 9 in notes to financial statements.
See accompanying notes to financial statements.
11
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (Continued)
- --------------------------------------------------------------------------------
LARGE CAP CORE LARGE CAP
EQUITY FUND GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2008 MARCH 31, 2008 MARCH 31,
(UNAUDITED) 2008 (UNAUDITED) 2008
-------------- --------------- --------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss) $ 390,740 $ 866,217 $ (34,836) $ (1,155,972)
Net realized gains (losses) from security transactions (1,535,125) 6,463,979 (31,108,201) 78,418,915
Net change in unrealized appreciation/depreciation on
investments (3,640,890) (11,752,556) (161,755,021) 11,288,276
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS (4,785,275) (4,422,360) (192,898,058) 88,551,219
- -----------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A -- (869,683) -- --
From net investment income, Class C -- (6,974) -- --
From net realized gains, Class A -- (3,072,157) -- --
From net realized gains, Class C -- (115,209) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (4,064,023) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold 7,402,488 3,683,254 200,952,419 248,046,527
Reinvested distributions -- 3,889,452 -- --
Payments for shares redeemed (21,162,012) (9,913,649) (115,100,289) (251,396,114)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS A SHARE
TRANSACTIONS (13,759,524) (2,340,943) 85,852,130 (3,349,587)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Proceeds from shares sold -- -- 1,800,687 4,553,787
Payments for shares redeemed -- -- (2,344,414) (3,971,491)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS B SHARE
TRANSACTIONS -- -- (543,727) 582,296
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C
Proceeds from shares sold 113,133 360,222 45,572,087 77,098,573
Reinvested distributions -- 100,046 -- --
Payments for shares redeemed (717,667) (1,514,470) (21,082,510) (46,988,762)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS C SHARE
TRANSACTIONS (604,534) (1,054,202) 24,489,577 30,109,811
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Proceeds from shares sold -- -- 252,062,314 18,878,626
Payments for shares redeemed -- -- (9,941,844) (30,750,486)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS Y SHARE
TRANSACTIONS -- -- 242,120,470 (11,871,860)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (19,149,333) (11,881,528) 159,020,392 104,021,879
NET ASSETS
Beginning of period 87,523,994 99,405,522 1,017,578,124 913,556,245
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $ 68,374,661 $ 87,523,994 $ 1,176,598,516 $ 1,017,578,124
===================================================================================================================================
ACCUMULATED NET INVESTMENT INCOME (LOSS) $ 605,047 $ 214,307 $ (34,836) $ --
===================================================================================================================================
See accompanying notes to financial statements.
12
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (Continued)
- --------------------------------------------------------------------------------
LARGE CAP MICRO CAP
VALUE FUND GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2008 MARCH 31, 2008 MARCH 31,
(UNAUDITED) 2008 (UNAUDITED) 2008
- -----------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss) $ 157,181 $ 369,221 $ (253,651) $ (887,983)
Net realized gains (losses) from security transactions (17,135,766) (4,840,876) 2,449,517 2,509,126
Net change in unrealized appreciation/depreciation on
investments 2,931,285 (17,198,483) (2,760,352) (12,624,840)
- -----------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS (14,047,300) (21,670,138) (564,486) (11,003,697)
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income, Class A -- (276,762) -- --
From net investment income, Class C -- (8,042) -- --
From net realized gains, Class A -- (1,859,568) -- --
From net realized gains, Class C -- (873,430) -- --
- -----------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (3,017,802) -- --
- -----------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold 2,952,622 19,751,253 454,321 2,189,172
Reinvested distributions -- 1,817,713 -- --
Payments for shares redeemed (6,396,144) (11,126,403) (5,350,389) (19,368,542)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS A SHARE
TRANSACTIONS (3,443,522) 10,442,563 (4,896,068) (17,179,370)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
Proceeds from shares sold 454,816 9,574,773 273,499 1,875,034
Reinvested distributions -- 719,340 -- --
Payments for shares redeemed (1,501,461) (7,628,859) (3,940,779) (9,767,972)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS C SHARE
TRANSACTIONS (1,046,645) 2,665,254 (3,667,280) (7,892,938)
- -----------------------------------------------------------------------------------------------------------------------------
CLASS Y
Proceeds from shares sold -- -- 11,393 434,272
Payments for shares redeemed -- -- (195,975) (308,125)
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS Y SHARE
TRANSACTIONS -- -- (184,582) 126,147
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DECREASE IN NET ASSETS (18,537,467) (11,580,123) (9,312,416) (35,949,858)
NET ASSETS
Beginning of period 33,248,498 44,828,621 36,088,532 72,038,390
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 14,711,031 $ 33,248,498 $ 26,776,116 $ 36,088,532
=============================================================================================================================
ACCUMULATED NET INVESTMENT INCOME (LOSS) $ 157,181 $ -- $ (253,651) $ --
=============================================================================================================================
See accompanying notes to financial statements.
13
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (Continued)
- --------------------------------------------------------------------------------
MID CAP
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
SEPT. 30, ENDED
2008 MARCH 31,
(UNAUDITED) 2008
- -----------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss $ (2,674,751) $ (9,330,452)
Net realized gains from security transactions 4,353,376 126,657,990
Net change in unrealized appreciation/depreciation on investments (104,118,734) (132,524,125)
- -----------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM OPERATIONS (102,440,109) (15,196,587)
- -----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains, Class A -- (83,106,401)
From net realized gains, Class B -- (9,367,106)
From net realized gains, Class C -- (44,739,520)
- -----------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS -- (137,213,027)
- -----------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS
CLASS A
Proceeds from shares sold 118,143,165 190,248,618
Reinvested distributions -- 70,079,740
Payments for shares redeemed (95,160,170) (232,671,372)
- -----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CLASS A SHARE TRANSACTIONS 22,982,995 27,656,986
- -----------------------------------------------------------------------------------------------------------
CLASS B
Proceeds from shares sold 1,457,253 4,289,248
Reinvested distributions -- 7,301,219
Payments for shares redeemed (5,951,687) (14,187,674)
- -----------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM CLASS B SHARE TRANSACTIONS (4,494,434) (2,597,207)
- -----------------------------------------------------------------------------------------------------------
CLASS C
Proceeds from shares sold 18,939,979 47,085,566
Reinvested distributions -- 28,910,918
Payments for shares redeemed (26,337,472) (68,954,343)
- -----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM CLASS C SHARE TRANSACTIONS (7,397,493) 7,042,141
- -----------------------------------------------------------------------------------------------------------
TOTAL DECREASE IN NET ASSETS (91,349,041) (120,307,694)
NET ASSETS
Beginning of period 1,014,290,396 1,134,598,090
- -----------------------------------------------------------------------------------------------------------
End of period $ 922,941,355 $ 1,014,290,396
===========================================================================================================
ACCUMULATED NET INVESTMENT LOSS $ (2,674,751) $ --
===========================================================================================================
See accompanying notes to financial statements.
14
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
DIVERSIFIED SMALL CAP GROWTH FUND--CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR PERIOD
SEPT. 30, ENDED ENDED
2008 MARCH 31, MARCH 31,
(UNAUDITED) 2008 2007 (A)
- ---------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 9.80 $ 11.64 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (0.01) 0.50 (0.07)
Net realized and unrealized gains (losses) on investments (0.48) (1.15) 1.71
- ---------------------------------------------------------------------------------------------------------------
Total from investment operations (0.49) (0.65) 1.64
- ---------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.19) --
- ---------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 9.31 $ 9.80 $ 11.64
===============================================================================================================
Total return(B) (5.00%)(C) (7.28%) 16.40%(C)
===============================================================================================================
Net assets at end of period (000's) $ 15,390 $ 22,955 $ 5,846
===============================================================================================================
Ratio of net expenses to average net assets 1.40%(D) 1.40% 1.40%(D)
Ratio of net investment income (loss) to average net assets (0.15%)(D) 0.33% (1.15%)(D)
Portfolio turnover rate 122%(D) 99% 86%(D)
(A) Represents the period from commencement of operations (September 6, 2006)
through March 31, 2007.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Not annualized.
(D) Annualized.
DIVERSIFIED SMALL CAP GROWTH FUND--CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
SEPT. 30, ENDED
2008 MARCH 31,
(UNAUDITED) 2008 (A)
- --------------------------------------------------------------------------------------
Net asset value at beginning of period $ 9.75 $ 12.44
- --------------------------------------------------------------------------------------
Loss from investment operations:
Net investment loss (0.05) (0.22)
Net realized and unrealized losses on investments (0.46) (1.28)
- --------------------------------------------------------------------------------------
Total from investment operations (0.51) (1.50)
- --------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.19)
- --------------------------------------------------------------------------------------
Net asset value at end of period $ 9.24 $ 9.75
======================================================================================
Total return(B) (5.23%)(C) (13.66%)(C)
======================================================================================
Net assets at end of period (000's) $ 3,294 $ 4,228
======================================================================================
Ratio of net expenses to average net assets 2.15%(D) 0.84%(D)
Ratio of net investment loss to average net assets (0.89%)(D) (17.70%)(D)
Portfolio turnover rate 122%(D) 99%
(A) Represents the period from commencement of operations (August 1, 2007)
through March 31, 2008.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Not annualized.
(D) Annualized.
See accompanying notes to financial statements.
15
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
DIVERSIFIED SMALL CAP GROWTH FUND--CLASS Y
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR PERIOD
SEPT. 30, ENDED ENDED
2008 MARCH 31, MARCH 31,
(UNAUDITED) 2008 2007 (A)
- ---------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 9.84 $ 11.66 $ 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 0.01 0.04 (0.05)
Net realized and unrealized gains (losses) on investments (0.50) (0.67) 1.71
- ---------------------------------------------------------------------------------------------------------------
Total from investment operations (0.49) (0.63) 1.66
- ---------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (1.19) --
- ---------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 9.35 $ 9.84 $ 11.66
===============================================================================================================
Total return (4.98%)(B) (7.09%) 16.60%(B)
===============================================================================================================
Net assets at end of period (000's) $ 12,066 $ 14,509 $ 6,128
===============================================================================================================
Ratio of net expenses to average net assets 1.15%(C) 1.15% 1.15%(C)
Ratio of net investment income (loss) to average net assets 0.11%(C) (0.52%) (0.90%)(C)
Portfolio turnover rate 122%(C) 99% 86%(C)
(A) Represents the period from commencement of operations (September 6, 2006)
through March 31, 2007.
(B) Not annualized.
(C) Annualized.
GROWTH OPPORTUNITIES FUND--CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 21.68 $ 20.75 $ 21.57 $ 17.92 $ 18.06 $ 12.70
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.09) (0.24) (0.35) (0.21) (0.24) (0.21)
Net realized and unrealized gains
(losses) on investments (2.33) 1.17 (0.47) 3.86 0.10 5.57
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.42) 0.93 (0.82) 3.65 (0.14) 5.36
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 19.26 $ 21.68 $ 20.75 $ 21.57 $ 17.92 $ 18.06
====================================================================================================================================
Total return(A) (11.16%)(B) 4.48% (3.80%) 20.37% (0.78%) 42.20%
====================================================================================================================================
Net assets at end of period (000's) $ 25,267 $ 26,349 $ 35,723 $ 98,004 $ 81,313 $117,605
====================================================================================================================================
Ratio of net expenses to average net
assets 1.55%(C) 1.55% 1.79% 1.64% 1.68% 1.60%
Ratio of net investment loss to average
net assets (0.87%)(C) (0.89%) (1.12%) (1.09%) (1.14%) (1.23%)
Portfolio turnover rate 50%(C) 82% 161% 80% 35% 47%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
See accompanying notes to financial statements.
16
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
GROWTH OPPORTUNITIES FUND--CLASS B
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 20.18 $ 19.38 $ 20.39 $ 16.97 $ 17.31 $ 12.13
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.17) (0.36) (0.51) (0.46) (0.43) (0.38)
Net realized and unrealized gains
(losses) on investments (2.01) 1.16 (0.50) 3.88 0.09 5.56
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.18) 0.80 (1.01) 3.42 (0.34) 5.18
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 18.00 $ 20.18 $ 19.38 $ 20.39 $ 16.97 $ 17.31
====================================================================================================================================
Total return(A) (10.80%)(B) 4.13% (4.95%) 20.15% (1.96%) 42.70%
====================================================================================================================================
Net assets at end of period (000's) $ 1,744 $ 1,974 $ 2,288 $ 3,230 $ 3,064 $ 3,608
====================================================================================================================================
Ratio of net expenses to average net
assets 2.30%(C) 2.30% 2.97% 2.97% 2.95% 2.84%
Ratio of net investment loss to average
net assets (1.60%)(C) (1.59%) (2.24%) (2.39%) (2.38%) (2.45%)
Portfolio turnover rate 50%(C) 82% 161% 80% 35% 47%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
GROWTH OPPORTUNITIES FUND--CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 20.42 $ 19.63 $ 20.60 $ 17.11 $ 17.39 $ 12.17
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.17) (0.35) (0.54) (0.40) (0.40) (0.37)
Net realized and unrealized gains
(losses) on investments (2.06) 1.14 (0.43) 3.89 0.12 5.59
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.23) 0.79 (0.97) 3.49 (0.28) 5.22
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 18.19 $ 20.42 $ 19.63 $ 20.60 $ 17.11 $ 17.39
====================================================================================================================================
Total return(A) (10.92%)(B) 4.02% (4.71%) 20.40% (1.61%) 42.89%
====================================================================================================================================
Net assets at end of period (000's) $ 9,342 $ 11,115 $ 11,957 $ 22,412 $ 21,789 $ 28,470
====================================================================================================================================
Ratio of net expenses to average net
assets 2.30%(C) 2.30% 2.71% 2.57% 2.61% 2.60%
Ratio of net investment loss to average
net assets (1.60%)(C) (1.60%) (2.00%) (2.01%) (2.04%) (2.21%)
Portfolio turnover rate 50%(C) 82% 161% 80% 35% 47%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
See accompanying notes to financial statements.
17
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP CORE EQUITY FUND--CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 10.36 $ 11.36 $ 10.49 $ 9.48 $ 9.10 $ 6.71
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.06 0.10 0.11 0.06 0.11 0.07
Net realized and unrealized gains
(losses) on investments (0.73) (0.62) 0.91 0.96 0.38 2.37
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.67) (0.52) 1.02 1.02 0.49 2.44
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.10) (0.15) (0.01) (0.11) (0.05)
Distributions from net realized gains -- (0.38) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.48) (0.15) (0.01) (0.11) (0.05)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 9.69 $ 10.36 $ 11.36 $ 10.49 $ 9.48 $ 9.10
====================================================================================================================================
Total return(A) (6.47%)(B) (5.03%) 9.83% 10.74% 5.32% 36.41%
====================================================================================================================================
Net assets at end of period (000's) $ 66,223 $ 84,611 $ 95,175 $ 25,693 $ 9,328 $ 8,783
====================================================================================================================================
Ratio of net expenses to average net
assets 1.15%(C) 1.15% 1.15% 1.00% 1.00% 0.97%(D)
Ratio of net investment income to average
net assets 0.97%(C) 0.89% 0.97% 1.03% 1.18% 0.85%(D)
Portfolio turnover rate 51%(C) 52% 54% 6% 7% 10%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
(D) Absent voluntary expense reimbursements, the ratio of net expenses to
average net assets would have been 1.00% and the ratio of net investment
income to average net assets would have been 0.82%.
See accompanying notes to financial statements.
18
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP CORE EQUITY FUND--CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 10.29 $ 11.29 $ 10.39 $ 9.46 $ 9.08 $ 6.72
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 0.01 0.01 (0.02) 0.03 0.04 0.01
Net realized and unrealized gains
(losses) on investments (0.71) (0.61) 0.96 0.91 0.37 2.37
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.70) (0.60) 0.94 0.94 0.41 2.38
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.02) (0.04) (0.01) (0.03) (0.02)
Distributions from net realized gains -- (0.38) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.40) (0.04) (0.01) (0.03) (0.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 9.59 $ 10.29 $ 11.29 $ 10.39 $ 9.46 $ 9.08
====================================================================================================================================
Total return(A) (6.80%)(B) (5.72%) 9.09% 9.91% 4.52% 35.38%
====================================================================================================================================
Net assets at end of period (000's) $ 2,152 $ 2,913 $ 4,231 $ 1,399 $ 1,675 $ 2,260
====================================================================================================================================
Ratio of net expenses to average net
assets 1.90%(C) 1.90% 1.90% 1.75% 1.75% 1.72%(D)
Ratio of net investment income (loss)
to average net assets 0.21%(C) 0.13% (0.26%) 0.26% 0.41% 0.13%(D)
Portfolio turnover rate 51%(C) 52% 54% 6% 7% 10%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
(D) Absent voluntary expense reimbursements, the ratio of net expenses to
average net assets would have been 1.75% and the ratio of net investment
income to average net assets would have been 0.10%.
See accompanying notes to financial statements.
19
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND--CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS THREE
ENDED MONTHS YEAR
SEPT. 30, YEAR ENDED MARCH 31, ENDED ENDED
2008 ------------------------------------------- MARCH 31, DEC. 31,
(UNAUDITED) 2008 2007 2006 2005 2004(A) 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 24.45 $ 22.06 $ 23.26 $ 19.84 $ 17.31 $ 16.53 $ 12.19
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 0.02 0.02 (0.04) (0.02) (0.02) (0.03) (0.07)
Net realized and unrealized gains
(losses) on investments (3.48) 2.37 (1.16) 3.44 2.55 0.81 4.41
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.46) 2.39 (1.20) 3.42 2.53 0.78 4.34
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 20.99 $ 24.45 $ 22.06 $ 23.26 $ 19.84 $ 17.31 $ 16.53
====================================================================================================================================
Total return(B) (14.15%)(C) 10.83% (5.16%) 17.24% 14.62% 4.72%(C) 35.60%
====================================================================================================================================
Net assets at end of period (000's) $687,288 $719,488 $656,582 $838,120 $274,121 $ 69,860 $ 62,187
====================================================================================================================================
Ratio of net expenses to
average net assets 1.24%(D) 1.25% 1.16% 1.17% 1.26% 1.30%(D) 1.39%
Ratio of net investment income (loss)
to average net assets 0.15%(D) 0.06% (0.16%) (0.13%) (0.23%) (0.78%)(D) (0.93%)
Portfolio turnover 116%(D) 72% 115% 104% 127% 60%(D) 60%
(A) Effective after the close of business on December 31, 2003, the Fund
changed its fiscal year end to March 31.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Not annualized.
(D) Annualized.
See accompanying notes to financial statements.
20
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND--CLASS B
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS THREE
ENDED MONTHS YEAR
SEPT. 30, YEAR ENDED MARCH 31, ENDED ENDED
2008 ------------------------------------------- MARCH 31, DEC. 31,
(UNAUDITED) 2008 2007 2006 2005 2004(A) 2003(B)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 23.68 $ 21.46 $ 22.83 $ 19.60 $ 17.24 $ 16.50 $ 15.45
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.07) (0.15) (0.21) (0.15) (0.12) (0.03) (0.06)
Net realized and unrealized gains
(losses) on investments (3.28) 2.37 (1.16) 3.38 2.48 0.77 1.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.35) 2.22 (1.37) 3.23 2.36 0.74 1.05
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 20.33 $ 23.68 $ 21.46 $ 22.83 $ 19.60 $ 17.24 $ 16.50
====================================================================================================================================
Total return(C) (14.15%)(D) 10.34% (6.00%) 16.48% 13.69% 4.48%(D) 6.80%(D)
====================================================================================================================================
Net assets at end of period (000's) $ 25,103 $ 29,829 $ 26,669 $ 27,781 $ 10,579 $ 1,897 $ 1,003
====================================================================================================================================
Ratio of net expenses to
average net assets 1.99%(E) 2.00% 2.02% 2.08% 2.25% 2.25%(E) 2.22%(E)
Ratio of net investment loss to
average net assets (0.58%)(E) (0.65%) (0.98%) (1.02%) (1.23%) (1.71%)(E) (1.80%)(E)
Portfolio turnover rate 116%(E) 72% 115% 104% 127% 60%(E) 60%
(A) Effective after the close of business on December 31, 2003, the Fund
changed its fiscal year end to March 31.
(B) Represents the period from commencement of operations (October 4, 2003)
through December 31, 2003.
(C) Total returns shown exclude the effect of applicable sales loads.
(D) Not annualized.
(E) Annualized.
See accompanying notes to financial statements.
21
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND--CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS THREE
ENDED MONTHS YEAR
SEPT. 30, YEAR ENDED MARCH 31, ENDED ENDED
2008 ------------------------------------------- MARCH 31, DEC. 31,
(UNAUDITED) 2008 2007 2006 2005 2004(A) 2003(B)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 23.74 $ 21.52 $ 22.88 $ 19.62 $ 17.24 $ 16.50 $ 15.45
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.07) (0.14) (0.20) (0.11) (0.08) (0.04) (0.05)
Net realized and unrealized gains
(losses) on investments (3.30) 2.36 (1.16) 3.37 2.46 0.78 1.10
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.37) 2.22 (1.36) 3.26 2.38 0.74 1.05
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 20.37 $ 23.74 $ 21.52 $ 22.88 $ 19.62 $ 17.24 $ 16.50
====================================================================================================================================
Total return(C) (14.20%)(D) 10.32% (5.94%) 16.62% 13.81% 4.48%(D) 6.80%(D)
====================================================================================================================================
Net assets at end of period (000's) $222,616 $236,582 $190,261 $188,810 $ 48,446 $ 4,310 $ 2,465
====================================================================================================================================
Ratio of net expenses to
average net assets 1.99%(E) 2.00% 1.95% 1.98% 2.03% 2.25%(E) 2.21%(E)
Ratio of net investment loss to
average net assets (0.58%)(E) (0.66%) (0.92%) (0.93%) (0.97%) (1.70%)(E) (1.78)%(E)
Portfolio turnover rate 116%(E) 72% 115% 104% 127% 60%(E) 60%
(A) Effective after the close of business on December 31, 2003, the Fund
changed its fiscal year end to March 31.
(B) Represents the period from commencement of operations (October 4, 2003)
through December 31, 2003.
(C) Total returns shown exclude the effect of applicable sales loads.
(D) Not annualized.
(E) Annualized.
See accompanying notes to financial statements.
22
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND--CLASS Y
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
SEPT. 30, YEAR ENDED MARCH 31, ENDED
2008 -------------------------------------- MARCH 31,
(UNAUDITED) 2008 2007 2006 2005(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 24.64 $ 22.19 $ 23.33 $ 19.86 $ 18.34
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.02 0.05 0.06 0.03 0.01
Net realized and unrealized gains (losses)
on investments (3.50) 2.40 (1.20) 3.44 1.51
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.48) 2.45 (1.14) 3.47 1.52
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 21.16 $ 24.64 $ 22.19 $ 23.33 $ 19.86
====================================================================================================================================
Total return (14.12%)(B) 11.04% (4.89%) 17.47% 8.29%(B)
====================================================================================================================================
Net assets at end of period (000's) $ 241,592 $ 31,679 $ 40,044 $ 66,655 $ 43,279
====================================================================================================================================
Ratio of net expenses to average net assets 0.95%(C) 1.00% 0.90% 0.93% 1.01%(C)
Ratio of net investment income to average net assets 0.47%(C) 0.21% 0.13% 0.12% 0.21%(C)
Portfolio turnover rate 116%(C) 72% 115% 104% 127%
(A) Represents the period from commencement of operations (November 10, 2004)
through March 31, 2005.
(B) Not annualized.
(C) Annualized.
See accompanying notes to financial statements.
23
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND--CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED PERIOD
SEPT. 30, MARCH 31, ENDED
2008 ------------------------ MARCH 31,
(UNAUDITED) 2008 2007 2006(A)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 6.41 $ 11.15 $ 10.19 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 0.04 0.10 0.04 0.01
Net realized and unrealized gains (losses) on investments (3.06) (4.15) 1.19 0.18
- ----------------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.02) (4.05) 1.23 0.19
- ----------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.09) (0.04) --
Distributions from net realized gains -- (0.60) (0.23) --
- ----------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.69) (0.27) --
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 3.39 $ 6.41 $ 11.15 $ 10.19
============================================================================================================================
Total return(B) (47.11%)(C) (37.31%) 12.12% 1.90%(C)
============================================================================================================================
Net assets at end of period (000's) $ 10,299 $ 23,609 $ 29,609 $ 11,684
============================================================================================================================
Ratio of net expenses to average net assets 1.35%(D) 1.35% 1.35% 1.30%(D)
Ratio of net investment income to average net assets 1.35%(D) 1.06% 0.55% 1.34%(D)
Portfolio turnover rate 97%(D) 75% 57% 68%(D)
(A) Represents the period from commencement of operations (March 6, 2006)
through March 31, 2006.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Not annualized.
(D) Annualized.
See accompanying notes to financial statements.
24
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND--CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED PERIOD
SEPT. 30, MARCH 31, ENDED
2008 -------------------------- MARCH 31,
(UNAUDITED) 2008 2007 2006(A)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 6.38 $ 11.09 $ 10.18 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) 0.02 0.03 (0.01) 0.00(B)
Net realized and unrealized gains (losses) on investments (3.05) (4.14) 1.17 0.18
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations (3.03) (4.11) 1.16 0.18
- -----------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.00)(B) (0.01) --
Distributions from net realized gains -- (0.60) (0.24) --
- -----------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.60) (0.25) --
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 3.35 $ 6.38 $ 11.09 $ 10.18
=============================================================================================================================
Total return(C) (47.49%)(D) (37.89%) 11.37% 1.80%(D)
=============================================================================================================================
Net assets at end of period (000's) $ 4,412 $ 9,639 $ 15,220 $ 561
=============================================================================================================================
Ratio of net expenses to average net assets 2.10%(E) 2.10% 2.10% 1.89%(E)
Ratio of net investment income (loss) to average net assets 0.58%(E) 0.30% (0.27%) 0.25%(E)
Portfolio turnover rate 97%(E) 75% 57% 68%(E)
(A) Represents the period from commencement of operations (March 6, 2006)
through March 31, 2006.
(B) Amount rounds to less than $0.01 per share.
(C) Total returns shown exclude the effect of applicable sales loads.
(D) Not annualized.
(E) Annualized.
See accompanying notes to financial statements.
25
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
MICRO CAP GROWTH FUND--CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
SEPT. 30, YEAR ENDED MARCH 31, ENDED
2008 -------------------------------------- MARCH 31,
(UNAUDITED) 2008 2007 2006 2005(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 10.22 $ 12.98 $ 13.50 $ 11.07 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.08) (0.21) (0.20) (0.10) (0.06)
Net realized and unrealized gains (losses) on
investments (0.28) (2.55) (0.32) 2.53 1.13
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.36) (2.76) (0.52) 2.43 1.07
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 9.86 $ 10.22 $ 12.98 $ 13.50 $ 11.07
====================================================================================================================================
Total return(B) (3.52%)(C) (21.26%) (3.85%) 21.95% 10.70%(C)
====================================================================================================================================
Net assets at end of period (000's) $ 16,503 $ 21,755 $ 45,536 $ 61,915 $ 32,378
====================================================================================================================================
Ratio of net expenses to average net assets 1.58%(D) 1.85% 1.95% 1.95% 1.95%(D)
Ratio of net investment loss to average net assets (1.27%)(D) (1.20%) (1.32%) (1.08%) (1.27%)(D)
Portfolio turnover rate 29%(D) 74% 91% 90% 101%(D)
(A) Represents the period from commencement of operations (June 22, 2004)
through March 31, 2005.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Not annualized.
(D) Annualized.
MICRO CAP GROWTH FUND--CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
SEPT. 30, YEAR ENDED MARCH 31, ENDED
2008 --------------------------------------- MARCH 31,
(UNAUDITED) 2008 2007 2006 2005(A)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 9.94 $ 12.72 $ 13.33 $ 11.01 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.12) (0.31) (0.30) (0.17) (0.08)
Net realized and unrealized gains (losses) on
investments (0.26) (2.47) (0.31) 2.49 1.09
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.38) (2.78) (0.61) 2.32 1.01
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 9.56 $ 9.94 $ 12.72 $ 13.33 $ 11.01
====================================================================================================================================
Total return(B) (3.82%)(C) (21.86%) (4.58%) 21.07% 10.10%(C)
====================================================================================================================================
Net assets at end of period (000's) $ 10,037 $ 13,912 $ 26,062 $ 33,310 $ 16,224
====================================================================================================================================
Ratio of net expenses to average net assets 2.33%(D) 2.60% 2.70% 2.70% 2.70%(D)
Ratio of net investment loss to average net assets (2.02%)(D) (1.96%) (2.07%) (1.84%) (2.07%)(D)
Portfolio turnover rate 29%(D) 74% 91% 90% 101%(D)
(A) Represents the period from commencement of operations (June 22, 2004)
through March 31, 2005.
(B) Total returns shown exclude the effect of applicable sales loads.
(C) Not annualized.
(D) Annualized.
See accompanying notes to financial statements.
26
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
MICRO CAP GROWTH FUND--CLASS Y
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
SEPT. 30, YEAR ENDED MARCH 31, ENDED
2008 ------------------------------- MARCH 31,
(UNAUDITED) 2008 2007 2006 2005(A)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 10.42 $ 13.21 $ 13.70 $ 11.16 $ 9.89
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.07) (0.13) (0.21) (0.03) (0.13)
Net realized and unrealized gains
(losses) on investments (0.28) (2.66) (0.28) 2.57 1.40
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.35) (2.79) (0.49) 2.54 1.27
- ------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 10.07 $ 10.42 $ 13.21 $ 13.70 $ 11.16
========================================================================================================================
Total return (3.36%)(B) (21.12%) (3.58%) 22.76% 12.84%(B)
========================================================================================================================
Net assets at end of period (000's) $ 236 $ 422 $ 440 $ 676 $ --(C)
========================================================================================================================
Ratio of net expenses to average net assets 1.33%(D) 1.57% 1.70% 1.55% 1.55%(D)
Ratio of net investment loss to average net assets (1.02%)(D) (0.95%) (1.05%) (0.77%) (2.34%)(D)
Portfolio turnover rate 29%(D) 74% 91% 90% 101%(D)
(A) Represents the period from commencement of operations (October 4, 2004)
through March 31, 2005.
(B) Not annualized.
(C) Amount rounds to less than $1,000.
(D) Annualized.
See accompanying notes to financial statements.
27
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND--CLASS A
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 21.16 $ 24.17 $ 24.02 $ 21.42 $ 21.73 $ 13.89
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.02) (0.12) (0.14) (0.12) (0.16) (0.13)
Net realized and unrealized gains
(losses) on investments (2.03) 0.01 2.20 4.70 1.03 7.97
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.05) (0.11) 2.06 4.58 0.87 7.84
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (2.90) (1.91) (1.98) (1.18) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 19.11 $ 21.16 $ 24.17 $ 24.02 $ 21.42 $ 21.73
====================================================================================================================================
Total return(A) (9.69%)(B) (1.53%) 8.84% 22.21% 4.13% 56.44%
====================================================================================================================================
Net assets at end of period (000's) $605,599 $649,891 $713,666 $639,501 $574,855 $458,524
====================================================================================================================================
Ratio of net expenses to average net
assets 1.46%(C) 1.47% 1.50% 1.50% 1.50% 1.49%(D)
Ratio of net investment loss to average
net assets (0.22%)(C) (0.53%) (0.66%) (0.57%) (0.84%) (0.93%)(D)
Portfolio turnover 71%(C) 64% 58% 69% 85% 79%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
(D) Absent voluntary expense reimbursements, the ratio of net expenses to
average net assets would have been 1.50% and the ratio of net investment
loss to average net assets would have been (0.94%).
See accompanying notes to financial statements.
28
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND--CLASS B
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 18.13 $ 21.25 $ 21.49 $ 19.50 $ 20.03 $ 12.53
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.10) (0.28) (0.30) (0.26) (0.29) (0.25)
Net realized and unrealized gains
(losses) on investments (1.72) 0.06 1.97 4.23 0.94 7.75
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (1.82) (0.22) 1.67 3.97 0.65 7.50
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (2.90) (1.91) (1.98) (1.18) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 16.31 $ 18.13 $ 21.25 $ 21.49 $ 19.50 $ 20.03
====================================================================================================================================
Total return(A) (10.04%)(B) (2.29%) 8.04% 21.24% 3.37% 59.86%
====================================================================================================================================
Net assets at end of period (000's) $51,856 $61,977 $74,935 $79,552 $71,879 $64,918
====================================================================================================================================
Ratio of net expenses to
average net assets 2.25%(C) 2.25% 2.25% 2.25% 2.25% 2.24%(D)
Ratio of net investment loss to
average net assets (1.02%)(C) (1.31%) (1.42%) (1.32%) (1.60%) (1.68%)(D)
Portfolio turnover rate 71%(C) 64% 58% 69% 85% 79%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
(D) Absent voluntary epxense reimbursements, the ratio of net expenses to
average net assets would have been 2.25% and the ratio of net investment
loss to average net assets would have been (1.69%).
See accompanying notes to financial statements.
29
- --------------------------------------------------------------------------------
Financial Highlights (Continued)
- --------------------------------------------------------------------------------
MID CAP GROWTH FUND--CLASS C
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
SEPT. 30, YEAR ENDED MARCH 31,
2008 -----------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 18.15 $ 21.27 $ 21.51 $ 19.51 $ 20.04 $ 12.55
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (0.10) (0.27) (0.28) (0.25) (0.30) (0.23)
Net realized and unrealized gains
(losses) on investments (1.72) 0.05 1.95 4.23 0.95 7.72
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (1.82) (0.22) 1.67 3.98 0.65 7.49
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (2.90) (1.91) (1.98) (1.18) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value at end of period $ 16.33 $ 18.15 $ 21.27 $ 21.51 $ 19.51 $ 20.04
====================================================================================================================================
Total return(A) (10.03%)(B) (2.28%) 8.04% 21.28% 3.36% 59.68%
====================================================================================================================================
Net assets at end of period (000's) $265,486 $302,422 $345,997 $327,867 $284,966 $252,021
====================================================================================================================================
Ratio of net expenses to average
net assets 2.24%(C) 2.24% 2.25% 2.25% 2.25% 2.24%(D)
Ratio of net investment loss to average
net assets (1.00%)(C) (1.30%) (1.41%) (1.32%) (1.60%) (1.68%)(D)
Portfolio turnover 71%(C) 64% 58% 69% 85% 79%
(A) Total returns shown exclude the effect of applicable sales loads.
(B) Not annualized.
(C) Annualized.
(D) Absent voluntary expense reimbursements, the ratio of net expenses to
average net assets would have been 2.25% and the ratio of net investment
loss to average net assets would have been (1.69%).
See accompanying notes to financial statements.
30
- --------------------------------------------------------------------------------
Notes to Financial Statements
September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The Diversified Small Cap Growth Fund, Growth Opportunities Fund, Large Cap Core
Equity Fund, Large Cap Growth Fund, Large Cap Value Fund, Micro Cap Growth Fund,
and Mid Cap Growth Fund (individually, a Fund, and collectively, the Funds) are
each a series of Touchstone Strategic Trust (the Trust). The Trust is registered
under the Investment Company Act of 1940, as amended (the Act), as an open-end
management investment company. The Trust was established as a Massachusetts
business trust under a Declaration of Trust dated November 18, 1982. The
Declaration of Trust, as amended, permits the Trustees to issue an unlimited
number of shares of each Fund.
The Funds are registered to offer different classes of shares: Class A shares,
Class B shares, Class C shares, and Class Y shares. The assets of each Fund are
segregated, and a shareholder's interest is limited to the Fund in which shares
are held. The Funds' prospectus provides a description of each Fund's investment
objectives, policies, and strategies along with information on the classes of
shares currently being offered as outlined below:
CLASS A (1) CLASS B (2) CLASS C (3) CLASS Y (4)
- ----------------------------------------------------------------------------------------
Diversified Small Cap Growth Fund X X X
Growth Opportunities Fund X X X
Large Cap Core Equity Fund X X
Large Cap Growth Fund X X X X
Large Cap Value Fund X X
Micro Cap Growth Fund X X X
Mid Cap Growth Fund X X X
(1) Currently sold subject to a maximum front-end sales load of 5.75% and a
maximum distribution fee of up to 0.25% of average daily net assets
(2) Sold subject to a 1.00% contingent deferred sales load for a one-year
period and a maximum distribution fee of up to 1.00% of average daily net
assets
(3) Sold subject to a maximum contingent deferred sales load of 5.00% for a
one-year period and incrementaly reduced over time and a maximum
distribution fee of up to 1.00% of average daily net assets
(4) Sold without a distribution fee or sales chage, but offered only through
selected dealers and subject to a higher minimum intial investment
Each Class A, Class B, Class C and Class Y share of a Fund represents identical
interests in the investment portfolio of such Fund and has the same rights,
except that (i) Class B and Class C shares bear the expenses of higher
distribution fees, which is expected to cause Class B and Class C shares to have
a higher expense ratio and to pay lower dividends than Class A and Class Y
shares; (ii) certain other class specific expenses will be borne solely by the
class to which such expenses are attributable; and (iii) each class has
exclusive voting rights with respect to matters relating to its own distribution
arrangements.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Funds' significant accounting policies:
SECURITY VALUATION -- The Funds' portfolio securities are valued as of the close
of the regular session of trading on the New York Stock Exchange (currently 4:00
p.m., Eastern time). Portfolio securities traded on stock exchanges are valued
at the last sale price and portfolio securities quoted by NASDAQ are valued at
the NASDAQ Official Closing Price (NOCP). Securities not traded on a particular
day, or for which the last sale price is not readily available, are valued at
their last broker-quoted bid prices as obtained from one or more of the major
market makers for such securities by an independent pricing service. Securities
for which market quotations or the NOCP are not readily available are valued
based on fair value as determined by or under the direction of the Board of
Trustees. Money market instruments and other debt securities with a remaining
maturity of less than 60 days are valued at amortized cost, which approximates
market. Shares of open-end mutual funds in which the Funds invest are valued at
their respective net asset values as reported by the underlying funds.
31
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 157,"FairValue
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles (GAAP) from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements.
Various inputs are used in determining the value of the Funds investments. These
inputs are summarized in the three broad levels listed below:
o Level 1 - quoted prices in active markets for identical securities
o Level 2 - other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, etc.)
o Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. For
example, money market securities are valued using amortized cost, in accordance
with rules under the Investment Company Act of 1940. Generally, amortized cost
approximates the current fair value of a security, but since the value is not
obtained from a quoted price in an active market, such securities are reflected
as Level 2.
The following is a summary of the inputs used to value the Funds net assets as
of September 30, 2008:
LEVEL 2 - LEVEL 3 -
OTHER SIGNIFICANT SIGNIFICANT
LEVEL 1 - OBSERVABLE UNOBSERVABLE
INVESTMENTS IN SECURITIES: QUOTED PRICES INPUTS INPUTS
- ---------------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ 31,263,052 $ -- $ --
Growth Opportunities Fund 36,180,108 -- --
Large Cap Core Equity Fund 67,723,197 -- --
Large Cap Growth Fund 1,160,484,541 -- --
Large Cap Value Fund 15,096,886 -- --
Micro Cap Growth Fund 26,969,665 -- --
Mid Cap Growth Fund 938,636,385 -- --
32
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
PORTFOLIO SECURITIES LOANED -- Each Fund may lend its portfolio securities.
Lending portfolio securities exposes a Fund to the risk that the borrower may
fail to return the loaned securities or may not be able to provide additional
collateral or that the Fund may experience delays in recovery of the loaned
securities or loss of rights in the collateral if the borrower fails
financially. To minimize these risks, the borrower must agree to maintain
collateral marked to market daily, in the form of cash and/or liquid securities,
with the Fund's custodian in an amount at least equal to the market value of the
loaned securities.
As of September 30, 2008, the following Funds loaned common stocks and received
collateral as follows:
MARKET VALUE VALUE OF
OF COMMON COLLATERAL
STOCKS LOANED RECEIVED
- --------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ 7,355,295 $ 7,417,316
Growth Opportunities Fund $ 9,313,955 $ 9,105,852
Large Cap Core Equity $ 7,612,685 $ 7,283,232
Large Cap Growth Fund $ 200,601,064 $ 232,401,090
Large Cap Value Fund $ 2,404,215 $ 2,698,547
Micro Cap Growth Fund $ 5,789,946 $ 5,721,855
Mid Cap Growth Fund $ 219,673,700 $ 214,302,210
All collateral received as cash and securities is received, held and
administered by the Funds' custodian for the benefit of the Funds in the
applicable custody account or other account established for the purpose of
holding collateral. Pursuant to the Fund's securities lending agreement, and
according to normal operating procedures, the custodian segregated an additional
$208,103, $329,453, $68,091,and $5,371,490 in collateral the following business
day for securities on loan in the Growth Opportunities Fund, Large Cap Core
Equity Fund, Micro Cap Growth Fund, and the Mid Cap Growth Fund, respectively,
as of September 30, 2008.
Funds participating in securities lending receive compensation in the form of
fees, or retain a portion of interest or dividends on the investment of any cash
received as collateral. The Funds also continue to receive interest or dividends
on the securities loaned. The loans are secured by collateral valued at least
equal, at all times, to the fair value of the securities loaned plus accrued
interest. Unrealized gain or loss on the fair value of the securities loaned
that may occur during the term of the loan are recognized by the Funds. The
Funds have the right under the lending agreement to recover the securities from
the borrower on demand.
SHARE VALUATION -- The net asset value per share of each class of shares of each
Fund is calculated daily by dividing the total value of a Fund's assets
attributable to that class, less liabilities attributable to that class, by the
number of outstanding shares of that class.
The maximum offering price per share of Class A shares of the Funds is equal to
the net asset value per share plus a sales load equal to 6.10% of the net asset
value (or 5.75% of the offering price). The maximum offering price per share of
Class B, Class C and Class Y shares of the Funds is equal to the net asset value
per share.
The redemption price per share of each class of shares of the Funds is equal to
the net asset value per share. However, Class B and Class C shares of the Funds
are subject to a contingent deferred sales load of 5.00% and 1.00%,
respectively, of the original purchase price if redeemed within a one-year
period from the date of purchase. The contingent deferred sales load for Class B
shares will be incrementally reduced over time. After the 6th year, there is no
contingent deferred sales load for Class B shares.
INVESTMENT INCOME -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities purchased
are recorded on an accrual basis.
33
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS -- Dividends arising from net investment income,
if any, are declared and paid to shareholders annually for each Fund. With
respect to each Fund, net realized short-term capital gains, if any, may be
distributed throughout the year and net realized long-term capital gains, if
any, are distributed at least once each year. Income dividends and capital gain
distributions are determined in accordance with income tax regulations.
ALLOCATIONS -- Investment income earned, realized capital gains and losses, and
unrealized appreciation and depreciation for the Funds are allocated daily to
each class of shares based upon its proportionate share of total net assets of
the Fund. Class specific expenses are charged directly to the class incurring
the expense. Common expenses, which are not attributable to a specific class,
are allocated daily to each class of shares based upon its proportionate share
of total net assets of the Fund. Expenses not directly billed to a Fund are
allocated proportionally among all Funds daily in relation to net assets of each
Fund or another reasonable measure.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the trade
date. Securities sold are determined on a specific identification basis.
ESTIMATES -- The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of income and expenses during the reporting period. Actual results could differ
from those estimates.
3. FEDERAL TAX INFORMATION
It is each Fund's policy to continue to comply with the special provisions of
the Internal Revenue Code applicable to regulated investment companies. As
provided therein, in any fiscal year in which a Fund so qualifies and
distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare and pay as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains
(earned during the twelve months ending October 31) plus undistributed amounts
from prior years.
The tax character of distributions paid for the years ended March 31, 2008 and
2007 was as follows:
DIVERSIFIED GROWTH LARGE CAP
SMALL CAP GROWTH OPPORTUNITIES CORE EQUITY
FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2008 2007 2008 2007 2008 2007
- ----------------------------------------------------------------------------------------------------------------
From ordinary income $ 1,091,263 $ -- $ -- $ -- $ 953,047 $ 623,902
From long-term capital gains 250,461 -- -- -- 3,110,976 --
From tax return of capital 44,031 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
$ 1,385,755 $ -- $ -- $ -- $ 4,064,023 $ 623,902
- ----------------------------------------------------------------------------------------------------------------
34
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
LARGE CAP
GROWTH LARGE CAP VALUE MICRO CAP GROWTH
FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2008 2007 2008 2007 2008 2007
- ----------------------------------------------------------------------------------------------------------------
From ordinary income $ -- $ -- $ 2,249,958 $ 772,101 $ -- $ --
From long-term capital gains -- -- 661,846 -- -- --
From tax return of capital -- -- 105,998 -- -- --
- ----------------------------------------------------------------------------------------------------------------
$ -- $ -- $ 3,017,802 $ 772,101 $ -- $ --
- ----------------------------------------------------------------------------------------------------------------
MID CAP GROWTH
FUND
- --------------------------------------------------------------------------------
YEAR YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2008 2007
- --------------------------------------------------------------------------------
From ordinary income $ 10,614,691 $ 12,124,355
From long-term capital gains 126,598,336 75,069,975
- --------------------------------------------------------------------------------
$ 137,213,027 $ 87,194,330
- --------------------------------------------------------------------------------
The following information is computed on a tax basis for each item as of March
31, 2008:
DIVERSIFIED LARGE CAP
SMALL CAP GROWTH CORE LARGE CAP
GROWTH OPPORTUNITIES EQUITY GROWTH
FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------
Tax cost of portfolio investments $ 56,415,538 $ 47,058,386 $ 87,325,439 $ 977,142,714
- ---------------------------------------------------------------------------------------------------------
Gross unrealized appreciation 1,546,812 5,504,522 5,305,960 199,024,710
Gross unrealized depreciation (6,640,524) (3,405,242) (5,064,120) (51,363,312)
- ---------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) (5,093,712) 2,099,280 241,840 147,661,398
Undistributed ordinary income -- -- 214,307 --
Undistributed long-term capital gains -- -- 4,426,626 --
Capital loss carryforward (11,436,443) (40,962,614) -- (26,177,120)
- ---------------------------------------------------------------------------------------------------------
Accumulated earnings (deficit) $ (16,530,155) $ (38,863,334) $ 4,882,773 $ 121,484,278
=========================================================================================================
LARGE CAP MICRO CAP MID CAP
VALUE GROWTH GROWTH
FUND FUND FUND
- -----------------------------------------------------------------------------------------------
Tax cost of portfolio investments $ 58,681,888 $ 33,647,433 $ 1,160,066,731
- -----------------------------------------------------------------------------------------------
Gross unrealized appreciation 1,271,302 10,478,692 158,197,406
Gross unrealized depreciation (18,271,607) (1,948,490) (96,996,648)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) (17,000,305) 8,530,202 61,200,758
Undistributed long-term capital gains -- -- 11,814,206
Capital loss carryforward -- (2,247,184) --
Post October losses (4,888,045) (1,988,651) --
- -----------------------------------------------------------------------------------------------
Accumulated earnings (deficit) $ (21,888,350) $ 4,294,367 $ 73,014,964
===============================================================================================
35
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The difference between the tax cost of portfolio investments and the financial
statement cost is primarily due to wash sales.
As of March 31, 2008, the Funds had the following capital loss carryforwards for
federal income tax purposes.
EXPIRES
FUND AMOUNT MARCH 31,
- --------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ 11,436,443 2014
===============
Growth Opportunities Fund $ 21,887,780 2011
17,098,132 2012
1,976,702 2013
---------------
$ 40,962,614
===============
Large Cap Growth Fund $ 26,177,120 2015
===============
Micro Cap Growth Fund $ 2,247,184 2015
===============
During the year ended March 31, 2008, the following funds utilized capital loss
carryforwards:
AMOUNT
- --------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ 132,819
Growth Opportunities Fund $ 6,885,891
Large Cap Growth Fund $ 78,858,310
Micro Cap Growth Fund $ 4,466,752
- --------------------------------------------------------------------------------
The capital loss carryforwards and Post-October losses may be utilized in future
years to offset net realized capital gains, if any, prior to distributing such
gains to shareholders.
Certain reclassifications, the result of permanent differences between financial
statement and income tax reporting requirements have been made to the components
of capital. These reclassifications have no impact on the net assets or net
asset value per share of the Funds and are designed to present the Fund's
capital accounts on a tax basis. The following reclassification of net
investment loss have been made to the following Funds for the year ended March
31, 2008:
ACCUMULATED ACCUMULATED
PAID-IN NET INVESTMENT NET REALIZED
CAPITAL INCOME (LOSS) GAINS (LOSSES)
- --------------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ (198,388) $ 105,830 $ 92,558
Growth Opportunities Fund $ (537,241) $ 537,241 $ --
Large Cap Growth Fund $ (1,155,972) $ 1,155,972 $ --
Large Cap Value Fund $ (105,998) $ (96,472) $ 202,470
Micro Cap Growth Fund $ (887,983) $ 887,983 $ --
Mid Cap Growth Fund $ -- $ 9,330,452 $ (9,330,452)
- --------------------------------------------------------------------------------------
36
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
GROSS GROSS UNREALIZED
FEDERAL UNREALIZED UNREALIZED APPRECIATION
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ 42,955,922 $ 1,150,384 $ (5,425,938) $ (4,275,554)
Growth Opportunities Fund $ 45,488,507 $ 3,657,960 $ (3,860,507) $ (202,547)
Large Cap Core Equity Fund $ 78,405,479 $ 3,003,926 $ (6,402,976) $ (3,399,050)
Large Cap Growth Fund $1,406,979,254 $ 89,541,108 $ (103,634,731) $ (14,093,623)
Large Cap Value Fund $ 31,864,453 $ -- $ (14,069,020) $ (14,069,020)
Micro Cap Growth Fund $ 26,921,670 $ 7,692,416 $ (1,922,566) $ 5,769,850
Mid Cap Growth Fund $1,195,856,571 $ 72,615,425 $ (115,533,401) $ (42,917,976)
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" (FIN 48). FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented, and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Funds' tax returns to determine whether the tax positions are
"more-likely-than-not" of being sustained by the applicable tax authority. Tax
positions not deemed to meet a more-likely-than-not threshold would be recorded
as a tax benefit in the current year. Adoption of FIN 48 is required for fiscal
years beginning after December 15, 2006 and is to be applied to all open tax
years as of the effective date. The Funds have analyzed their tax positions
taken on Federal income tax returns for all open tax years (tax years ended
March 31, 2005 through 2008) for purposes of implementing FIN 48 and have
concluded that no provision for income tax is required in their financial
statements.
4. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments and U.S. Government
securities) were as follows for the six-months ended September 30, 2008:
DIVERSIFIED
SMALL CAP GROWTH LARGE CAP LARGE CAP
GROWTH OPPORTUNITIES CORE EQUITY GROWTH
FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------
Purchases of investment securities $ 24,119,224 $ 13,669,853 $ 20,815,557 $ 960,456,535
- ------------------------------------------------------------------------------------------------------
Proceeds from sales and maturities $ 33,543,614 $ 10,327,323 $ 35,335,412 $ 645,598,692
- ------------------------------------------------------------------------------------------------------
LARGE CAP MICRO CAP MID CAP
VALUE GROWTH GROWTH
FUND FUND FUND
- -------------------------------------------------------------------------------------
Purchases of investment securities $ 12,773,984 $ 4,680,763 $ 376,241,571
- -------------------------------------------------------------------------------------
Proceeds from sales and maturities $ 16,229,767 $ 14,023,608 $ 364,289,832
- -------------------------------------------------------------------------------------
5. TRANSACTIONS WITH AFFILIATES
Certain officers of the Trust are also officers of the Advisor (Touchstone
Advisors, Inc.), the Underwriter (Touchstone Securities, Inc.) and/or JPMorgan
Chase Bank, N.A. ("JPMorgan" and the Sub-Administrator and Transfer Agent to the
Funds). The Advisor and Underwriter are each wholly owned indirect subsidiaries
of The Western and Southern Life Insurance Company (Western-Southern).
37
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
MANAGEMENT AGREEMENTS
The Advisor provides general investment supervisory services for the Funds,
under the terms of an Advisory Agreement. Under the Advisory Agreement, the
Funds pay the Advisor a fee, which is computed and accrued daily and paid
monthly, at an annual rate based on average daily net assets as follows:
Diversified Small Cap Growth Fund 1.05%
- ------------------------------------------------------------------------------------------
Growth Opportunities Fund 1.00% on the first $50 million
0.90% on the next $50 million
0.80% on the next $900 million
0.75% of such assets in excess of $1 billion
- ------------------------------------------------------------------------------------------
Large Cap Core Equity Fund 0.65% on the first $100 million
0.60% on the next $100 million
0.55% on the next $100 million
0.50% of such assets in excess of $300 million
- ------------------------------------------------------------------------------------------
Large Cap Growth Fund 0.75% on the first $200 million
0.70% on the next $800 million
0.65% of such assets in excess of $1 billion
- ------------------------------------------------------------------------------------------
Large Cap Value Fund 0.75%
- ------------------------------------------------------------------------------------------
Micro Cap Growth Fund 1.25%
- ------------------------------------------------------------------------------------------
Mid Cap Growth Fund 0.80%
- ------------------------------------------------------------------------------------------
The Advisor has retained various Sub-Advisors to manage the investments of the
Funds under the terms of a Sub-Advisory Agreement. The Advisor (not the Funds)
pays the Sub-Advisors a fee for these services.
Fort Washington Investment Advisors, Inc. (Fort Washington), an affiliate of the
Advisor, has been retained by the Advisor to manage the investments of the
Diversified Small Cap Growth Fund.
Westfield Capital Management Company, LP (Westfield) has been retained by the
Advisor to manage the investments of the Growth Opportunities Fund and a portion
of the investments of the Mid Cap Growth Fund.
Todd Investment Advisors, Inc. (Todd), an affiliate of the Advisor, has been
retained by the Advisor to manage the investments of the Large Cap Core Equity
Fund.
Navellier & Associates, Inc. (Navellier) has been retained by the Advisor to
manage the investments of the Large Cap Growth Fund.
JS Asset Management, LLC (JSAM) has been retained by the Advisor to manage the
investments of the Large Cap Value Fund.
Bjurman, Barry & Associates (Bjurman) has been retained by the Advisor to manage
the investments of the Micro Cap Growth Fund.
TCW Investment Management Company (TCW) has been retained by the Advisor to
manage a portion of the investments of the Mid Cap Growth Fund.
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
The Advisor entered into an Administration and Accounting Services Agreement
with the Trust, whereby the Advisor is responsible for supplying executive and
regulatory compliance services, supervises the preparation of tax returns, and
coordinates the preparation of reports to shareholders and reports to, and
filings with, the Securities and Exchange Commission and state securities
authorities, materials for meetings of the Board of Trustees, calculating the
daily net asset value per share and maintaining the financial books and records
of each Fund. For its services, the Advisor receives an annual fee of 0.20% of
the aggregate average daily net assets of the Trust, Touchstone Funds Group
Trust, Touchstone Investment Trust (excluding Institutional Money Market Fund),
and Touchstone Tax-Free Trust up to and including $6 billion; 0.16% of the next
$4 billion of aggregate average daily net assets; and 0.12% of the aggregate
average daily net assets of all such assets in excess of $10 billion. The fee is
allocated among the Funds on the basis of relative daily net assets.
38
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
The Advisor has engaged JPMorgan as the Sub-Administrator to the Trust. JPMorgan
provides administrative and accounting services to the Trust and is compensated
directly by the Advisor, not the Trust.
EXPENSE LIMITATION AGREEMENT
The Trust and the Advisor have entered into an Expense Limitation Agreement to
contractually limit operating expenses of the Diversified Small Cap Growth Fund,
Growth Opportunities Fund, Large Cap Core Equity Fund, Large Cap Growth Fund,
Large Cap Value Fund, Micro Cap Growth Fund, and Mid Cap Growth Fund. The
maximum operating expense limit in any year with respect to the Funds is based
on a percentage of the average daily net assets of the Funds. The Advisor has
agreed to waive advisory fees and reimburse expenses in order to maintain
expense limitations for the Funds as follows through March 31, 2009:
CLASS A CLASS B CLASS C CLASS Y
- -------------------------------------------------------------------------------
Diversified Small Cap Growth Fund 1.40% -- 2.15% 1.15%
Growth Opportunities Fund 1.55% 2.30% 2.30% --
Large Cap Core Equity Fund 1.15% -- 1.90% --
Large Cap Growth Fund 1.25% 2.00% 2.00% 0.99%
Large Cap Value Fund 1.35% -- 2.10% --
Micro Cap Growth Fund 1.58% -- 2.33% 1.33%
Mid Cap Growth Fund 1.50% 2.25% 2.25% --
For the six-months ended September 30, 2008, the Advisor waived investment
advisory fees, administration fees, and/or reimbursed expenses as follows:
OTHER
INVESTMENT OPERATING
ADVISORY ADMINISTRATION EXPENSES
FEES WAIVED FEES WAIVED REIMBURSED
- ---------------------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ 38,579 $ 40,874 $ 48,548
Growth Opportunities Fund $ -- $ 42,695 $ 52,861
Large Cap Core Equity Fund $ -- $ 49,083 $ --
Large Cap Growth Fund $ -- $ 272,427 $ --
Large Cap Value Fund $ -- $ 27,802 $ 22,557
Micro Cap Growth Fund $ 4,176 $ 32,752 $ 86,806
Mid Cap Growth Fund $ -- $ 6,562 $ --
- ---------------------------------------------------------------------------------------------
TRANSFER AGENT AGREEMENT
Under the terms of the Transfer Agent Agreement between the Trust and JPMorgan,
JPMorgan maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of each Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. For these services,
JPMorgan receives a monthly fee per shareholder account from each Fund. In
addition, each Fund pays JPMorgan out-of-pocket expenses including, but not
limited to, postage and supplies.
39
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
For the six-months ended September 30, 2008, the following Funds reimbursed the
Advisor for amounts paid to third parties that provide sub-transfer agency and
other administrative services to the Funds. These amounts are included in
transfer agent fees on the Statements of Operations:
AMOUNT
- --------------------------------------------------------------------------------
Diversified Small Cap Growth Fund $ 3,388
Growth Opportunities Fund $ 2,552
Large Cap Core Equity Fund $ 1,697
Large Cap Growth Fund $ 235,949
Large Cap Value Fund $ 1,233
Micro Cap Growth Fund $ 12,187
Mid Cap Growth Fund $ 204,513
UNDERWRITING AGREEMENT
The Underwriter is the Funds' principal underwriter and, as such, acts as the
exclusive agent for distribution of the Funds' shares. Under the terms of the
Underwriting Agreement between the Trust and Underwriter, the Underwriter earned
the following from underwriting and broker commissions on the sale of shares of
the following Funds for the six-months ended September 30, 2008:
Diversified Small Cap Growth Fund $ 1,227
Growth Opportunities Fund $ 4,992
Large Cap Core Equity Fund $ 1,249
Large Cap Growth Fund $ 102,529
Large Cap Value Fund $ 1,662
Micro Cap Growth Fund $ 593
Mid Cap Growth Fund $ 48,473
In addition, the Underwriter collected the following contingent deferred sales
charges on the redemption of Class B and Class C shares of the following Funds
during the six-months ended September 30, 2008:
Diversified Small Cap Growth Fund $ 14
Growth Opportunities Fund $ 986
Large Cap Core Equity Fund $ 38
Large Cap Growth Fund $ 36,780
Large Cap Value Fund $ 1,462
Micro Cap Growth Fund $ 877
Mid Cap Growth Fund $ 48,499
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which Class A shares
of each Fund may directly incur or reimburse the Advisor or the Underwriter for
expenses related to the distribution and promotion of shares. The annual
limitation for payment of such expenses under the Class A Plan is 0.25% of
average daily net assets attributable to such shares.
The Trust also has a Plan of Distribution (Class B and Class C Plan) under which
Class B and Class C shares of each Fund may directly incur or reimburse the
Advisor or the Underwriter for expenses related to the distribution and
promotion of shares. The annual limitation for payment of such expenses under
the Class B and Class C Plan is 1.00% of average daily net assets attributable
to Class B and Class C shares.
40
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
COMPLIANCE SERVICES AGREEMENT
Under the terms of the Compliance Services Agreement between the Trust and
JPMorgan, JPMorgan provides certain compliance services to the Trust and
provides administrative support services to the Funds' Compliance Program and
Chief Compliance Officer. For these services, JPMorgan receives a quarterly fee
from each Fund.
AFFILIATED INVESTMENTS
Each Fund may invest in the Touchstone Institutional Money Market Fund, subject
to compliance with the several conditions set forth in an order received by the
Trust from the Securities and Exchange Commission. To the extent that the other
Touchstone Funds are invested in the Touchstone Institutional Money Market Fund,
the Advisor and Administrator will be paid additional fees from the Touchstone
Institutional Money Market Fund that will not be waived or reimbursed.
A summary of each Fund's investment in the Touchstone Institutional Money Market
Fund, for the six-months ended September 30, 2008, is noted below:
SHARE ACTIVITY
--------------------------------------------------------------
BALANCE BALANCE VALUE
03/31/08 PURCHASES SALES 09/30/08 DIVIDENDS 09/30/08
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Small Cap Growth Fund 426,337 15,359,092 (14,894,346) 891,083 $ 14,109 $ 891,083
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Opportunities Fund 2,103,630 7,782,210 (9,885,840) -- $ 16,460 $ --
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Core Equity Fund 909,424 9,251,445 (9,395,432) 765,437 $ 17,429 $ 765,437
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Fund 40,267,884 371,730,323 (350,145,903) 61,852,304 $ 555,787 $ 61,852,304
- -----------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Fund 1,031,802 6,486,901 (6,956,788) 561,915 $ 10,240 $ 561,915
- -----------------------------------------------------------------------------------------------------------------------------------
Micro Cap Growth Fund -- 5,250,763 (4,948,617) 302,146 $ 3,793 $ 302,146
- -----------------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth Fund 31,135,521 229,425,006 (221,539,183) 39,021,344 $ 602,219 $ 39,021,344
- -----------------------------------------------------------------------------------------------------------------------------------
As of September 30, 2008, 61% of the Large Cap Core Equity Fund was owned by
Western-Southern and subsidiaries.
41
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
6. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital shares as shown in the Statements of Changes in
Net Assets are the result of the following capital share transactions for the
periods shown:
DIVERSIFIED SMALL CAP GROWTH
GROWTH FUND OPPORTUNITIES FUND
- ----------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2008 MARCH 31, 2008 MARCH 31,
(UNAUDITED) 2008(A) (UNAUDITED) 2008
- ----------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold 123,619 263,944 265,917 386,840
Shares reinvested -- 63,482 -- --
Shares issued in connection with acquisition(B) -- 1,618,654 -- --
Shares redeemed (814,148) (105,123) (169,283) (893,540)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (690,529) 1,840,957 96,634 (506,700)
Shares outstanding, beginning of period 2,343,253 502,296 1,215,195 1,721,895
- ----------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 1,652,724 2,343,253 1,311,829 1,215,195
======================================================================================================================
CLASS B
Shares sold -- -- 2,135 6,701
Shares redeemed -- -- (3,071) (26,917)
- ----------------------------------------------------------------------------------------------------------------------
Net decrease in shares outstanding -- -- (936) (20,216)
Shares outstanding, beginning of period -- -- 97,843 118,059
- ----------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period -- -- 96,907 97,843
======================================================================================================================
CLASS C
Shares sold 2,806 2,428 35,011 77,480
Shares reinvested -- 174 -- --
Shares issued in connection with acquisition(B) -- 447,314 -- --
Shares redeemed (79,701) (16,527) (65,817) (142,358)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (76,895) 433,389 (30,806) (64,878)
Shares outstanding, beginning of period 433,389 -- 544,371 609,249
- ----------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 356,494 433,389 513,565 544,371
======================================================================================================================
CLASS Y
Shares sold 30,043 13,179 -- --
Shares reinvested -- 53,188 -- --
Shares issued in connection with acquisition(B) -- 955,214 -- --
Shares redeemed (214,895) (72,284) -- --
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (184,852) 949,297 -- --
Shares outstanding, beginning of period 1,475,053 525,756 -- --
- ----------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 1,290,201 1,475,053 -- --
======================================================================================================================
(A) Class C represents the period from commencement of operations (August 1,
2007) through March 31, 2008.
(B) See Footnote 9 in notes to financial statements.
42
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
LARGE CAP LARGE CAP
CORE EQUITY FUND GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2008 MARCH 31, 2008 MARCH 31,
(UNAUDITED) 2008 (UNAUDITED) 2008
- --------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold 744,759 315,075 8,057,966 9,792,309
Shares reinvested -- 330,369 -- --
Shares redeemed (2,073,981) (857,207) (4,734,071) (10,133,781)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (1,329,222) (211,763) 3,323,895 (341,472)
Shares outstanding, beginning of period 8,164,279 8,376,042 29,423,759 29,765,231
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 6,835,057 8,164,279 32,747,654 29,423,759
====================================================================================================================
CLASS B
Shares sold -- -- 74,039 182,120
Shares reinvested -- -- -- --
Shares redeemed -- -- (98,459) (165,299)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding -- -- (24,420) 16,821
Shares outstanding, beginning of period -- -- 1,259,452 1,242,631
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period -- -- 1,235,032 1,259,452
====================================================================================================================
CLASS C
Shares sold 10,825 30,672 1,851,318 3,108,568
Shares reinvested -- 8,571 -- --
Shares redeemed (69,394) (130,836) (886,536) (1,984,001)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (58,569) (91,593) 964,782 1,124,567
Shares outstanding, beginning of period 283,002 374,595 9,965,083 8,840,516
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 224,433 283,002 10,929,865 9,965,083
====================================================================================================================
CLASS Y
Shares sold -- -- 10,560,811 740,061
Shares redeemed -- -- (431,241) (1,259,270)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding -- -- 10,129,570 (519,209)
Shares outstanding, beginning of period -- -- 1,285,657 1,804,866
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period -- -- 11,415,227 1,285,657
====================================================================================================================
43
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
LARGE CAP MICRO CAP
VALUE FUND GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
SEPT. 30, ENDED SEPT. 30, ENDED
2008 MARCH 31, 2008 MARCH 31,
(UNAUDITED) 2008 (UNAUDITED) 2008
- --------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold 521,335 2,079,360 41,313 167,118
Shares reinvested -- 237,399 -- --
Shares redeemed (1,165,145) (1,289,234) (496,779) (1,546,046)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (643,810) 1,027,525 (455,466) (1,378,928)
Shares outstanding, beginning of period 3,683,023 2,655,498 2,128,878 3,507,806
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 3,039,213 3,683,023 1,673,412 2,128,878
====================================================================================================================
CLASS C
Shares sold 83,740 929,283 26,093 148,167
Shares reinvested -- 94,785 -- --
Shares redeemed (278,597) (885,835) (376,829) (796,654)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (194,857) 138,233 (350,736) (648,487)
Shares outstanding, beginning of period 1,510,767 1,372,534 1,400,294 2,048,781
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 1,315,910 1,510,767 1,049,558 1,400,294
====================================================================================================================
CLASS Y
Shares sold -- -- 1,019 31,621
Shares redeemed -- -- (18,055) (24,429)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding -- -- (17,036) 7,192
Shares outstanding, beginning of period -- -- 40,493 33,301
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period -- -- 23,457 40,493
====================================================================================================================
44
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
MID CAP
GROWTH FUND
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
SEPT. 30, ENDED
2008 MARCH 31,
(UNAUDITED) 2008
- --------------------------------------------------------------------------------
CLASS A
Shares sold 5,344,029 7,756,111
Shares reinvested -- 3,012,887
Shares redeemed (4,361,927) (9,592,017)
- --------------------------------------------------------------------------------
Net increase in shares outstanding 982,102 1,176,981
Shares outstanding, beginning of period 30,708,475 29,531,494
- --------------------------------------------------------------------------------
Shares outstanding, end of period 31,690,577 30,708,475
================================================================================
CLASS B
Shares sold 76,945 203,646
Shares reinvested -- 365,609
Shares redeemed (315,844) (677,956)
- --------------------------------------------------------------------------------
Net decrease in shares outstanding (238,899) (108,701)
Shares outstanding, beginning of period 3,418,000 3,526,701
- --------------------------------------------------------------------------------
Shares outstanding, end of period 3,179,101 3,418,000
================================================================================
CLASS C
Shares sold 996,942 2,235,765
Shares reinvested -- 1,446,269
Shares redeemed (1,396,958) (3,290,914)
- --------------------------------------------------------------------------------
Net increase (decrease) in shares outstanding (400,016) 391,120
Shares outstanding, beginning of period 16,658,584 16,267,464
- --------------------------------------------------------------------------------
Shares outstanding, end of period 16,258,568 16,658,584
================================================================================
7. CUSTODY OFFSET ARRANGEMENT
Some Funds may participate in the Custody Fee Offset Program offered by the
Custodian when they execute security trades where the Custodian is the broker.
If a Fund chooses to participate in the Custody Fee Offset Program, a rebate
amount will be applied to and credited against the fees payable by the Fund to
the Custodian. For financial reporting purposes for the six months ended
September 30, 2008, custodian fees reduced by the Custodian were $7,589 for the
Large Cap Growth Fund. There was no effect on net investment income.
8. COMMITMENTS AND CONTINGENCIES
The Funds indemnify the Trust's officers and Trustees for certain liabilities
that might arise from their performance of their duties to the Funds.
Additionally, in the normal course of business, the Funds enter into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. The Funds' maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Funds that have not yet occurred. However, based on experience, the Funds expect
the risk of loss to be remote.
45
- --------------------------------------------------------------------------------
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
9. ACQUISITIONS
On February 15, 2008, a Special Meeting of Shareholders was held to approve or
disapprove an Agreement and Plan of Reorganization providing for the transfer of
all of assets and liabilities of the Small Cap Growth Fund to the Diversified
Small Cap Growth Fund in exchange for shares of the Diversified Small Cap Growth
Fund and the subsequent liquidation of the Small Cap Growth Fund.
The acquisition was approved as follows:
NUMBER OF VOTES
- ------------------------------------------------------------------------
FOR AGAINST ABSTAIN
- ------------------------------------------------------------------------
1,225,698 12,830 42,194
The following is a summary of shares outstanding, net assets, net asset value
per share, unrealized depreciation and realized gain (loss) immediately before
and after the reorganization:
BEFORE AFTER
REORGANIZATION REORGANIZATION
- --------------------------------------------------------------------------------------------
DIVERSIFIED DIVERSIFIED
SMALL CAP SMALL CAP SMALL CAP
GROWTH GROWTH GROWTH
FUND FUND FUND
- --------------------------------------------------------------------------------------------
Shares:
Class A 927,021 1,461,709 2,388,730
Class B 204,375 -- --
Class C 321,452 128,199 449,651
Class Y 654,070 886,760 1,540,830
Net Assets:
Class A $ 13,935,302 $ 10,979,134 $ 24,914,436
Class B $ 2,952,341 $ -- $ --
Class C $ 4,647,481 $ 19,172 $ 4,666,653
Class Y $ 10,000,219 $ 6,131,096 $ 16,131,315
Net Asset Value:
Class A $ 15.03 $ 10.43 $ 10.43
Class B $ 14.45 $ -- $ --
Class C $ 14.46 $ 10.38 $ 10.38
Class Y $ 15.29 $ 10.47 $ 10.47
Unrealized Depreciation $ (1,767,740) $ (214,531) $ (1,982,271)
Accumulated Net Realized Gain (Loss) $ (12,053,670) $ 154,203 $ (11,899,467)
46
- --------------------------------------------------------------------------------
Portfolio of Investments
Diversified Small Cap Growth Fund - September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 98.8% SHARES VALUE
- --------------------------------------------------------------------------------
HEALTH CARE -- 29.5%
Acorda Therapeutics, Inc.* 24,045 $ 573,473
Alexion Pharmaceuticals, Inc.* 20,828 818,540
ArthroCare Corp.* + 13,074 362,411
Biomarin Pharmaceutical, Inc.* 23,306 617,376
Celgene Corp.* 1 63
eResearch Technology, Inc.* 39,160 466,396
Genomic Health, Inc.* + 29,753 673,905
Gen-Probe, Inc.* 10,854 575,805
Myriad Genetics, Inc.* 2,375 154,090
NuVasive, Inc.* + 13,905 685,934
Onyx Pharmaceuticals, Inc.* 5,680 205,502
OSI Pharmaceuticals, Inc.* + 14,162 698,045
RTI Biologics, Inc.* 57,670 539,215
SonoSite, Inc.* 17,615 553,111
The Spectranetics Corp.* 91,035 421,492
TranS1, Inc.* + 37,181 367,720
United Therapeutics Corp.* 6,255 657,838
Wright Medical Group, Inc.* 22,965 699,055
- --------------------------------------------------------------------------------
9,069,971
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 19.7%
Anixter International, Inc.* + 4,429 263,570
Avnet, Inc.* 10,296 253,590
CACI International, Inc. - Class A* 1,550 77,655
Digital River, Inc.* 7,718 250,063
DivX, Inc.* 33,651 217,722
Euronet Worldwide, Inc.* 14,344 239,975
F5 Networks, Inc.* 10,298 240,767
Foundry Networks, Inc.* 20,055 365,202
j2 Global Communications, Inc.* 12,751 297,736
Micros Systems, Inc.* 11,558 308,136
Microsemi Corp.* 17,562 447,481
Nuance Communications, Inc.* 18,967 231,208
Parametric Technology Corp.* 17,550 322,920
Polycom, Inc.* 14,830 343,018
Progress Software Corp.* 6,165 160,228
Skyworks Solutions, Inc.* + 39,812 332,828
Sybase, Inc.* + 8,408 257,453
Tessera Technologies, Inc.* 18,164 296,800
Ultra Clean Holdings, Inc.* 5,705 28,753
ValueClick, Inc.* 18,660 190,892
VistaPrint Ltd.* + 10,855 356,478
Website Pros, Inc.* 46,021 248,513
Wright Express Corp.* 11,414 337,398
- --------------------------------------------------------------------------------
6,068,386
- --------------------------------------------------------------------------------
INDUSTRIALS -- 16.1%
AeroVironment, Inc.* 11,906 380,397
Badger Meter, Inc. + 8,530 400,484
Ducommun, Inc. 12,327 294,369
Energy Conversion Devices, Inc.* 10,205 594,440
EnPro Industries, Inc.* 9,742 362,013
ESCO Technologies, Inc.* 8,810 424,378
FTI Consulting, Inc.* 7,185 519,044
LaBarge, Inc.* 11,465 172,663
Lindsay Corp. + 3,825 278,269
Old Dominion Freight Line, Inc.* 9,090 257,611
Titan Machinery, Inc.* + 13,240 275,524
Valmont Industries, Inc. 1,985 164,140
Wabtec Corp. 7,118 364,655
Watson Wyatt Worldwide, Inc. 3,278 163,015
Woodward Governor Co. 8,782 309,741
- --------------------------------------------------------------------------------
4,960,743
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 11.9%
Barnes & Noble, Inc. + 6,685 174,345
BJ'S Restaurants, Inc.* 12,711 151,769
Callaway Golf Co. 11,895 167,363
Chipotle Mexican Grill, Inc.* + 4,071 225,900
Deckers Outdoor Corp.* 3,625 377,289
Fuel Systems Solutions, Inc.* 6,335 218,241
Iconix Brand Group, Inc.* + 13,582 177,653
Jarden Corp.* + 13,645 319,975
Life Time Fitness* + 7,382 230,835
LKQ Corp.* 17,590 298,502
Men's Wearhouse, Inc. + 7,070 150,167
Morningstar, Inc.* 5,324 295,322
Panera Bread Co.* + 6,315 321,434
PetMed Express, Inc.* 20,623 323,781
Polaris Industries, Inc. + 4,740 215,623
- --------------------------------------------------------------------------------
3,648,199
- --------------------------------------------------------------------------------
ENERGY -- 8.3%
Atwood Oceanics, Inc.* 8,730 317,772
Berry Petroleum Co. 10,022 388,152
GMX Resources, Inc.* 5,540 264,812
ION Geophysical Corp.* 28,830 409,098
Lufkin Industries, Inc. 4,775 378,896
McMoRan Exploration Co.* + 15,420 364,529
Natural Gas Services Group, Inc.* 12,611 220,314
PetroQuest Energy, Inc.* 13,094 200,993
- --------------------------------------------------------------------------------
2,544,566
- --------------------------------------------------------------------------------
FINANCIALS -- 5.3%
Cash America International, Inc. 8,225 296,429
EZCORP, Inc. - Class A* 24,480 460,224
LaSalle Hotel Properties 6,460 150,647
Life Partners Holdings, Inc. 1 36
Portfolio Recovery Associates, Inc.* + 11,060 537,848
Waddell & Reed Financial, Inc. - Class A 7,420 183,645
- --------------------------------------------------------------------------------
1,628,829
- --------------------------------------------------------------------------------
CONSUMER STAPLES -- 3.0%
Andersons, Inc. + 7,746 272,814
BJ's Wholesale Club, Inc.* 8,760 340,413
Chattem, Inc.* 1,995 155,969
Flowers Foods, Inc. 5,435 159,572
- --------------------------------------------------------------------------------
928,768
- --------------------------------------------------------------------------------
47
- --------------------------------------------------------------------------------
Diversified Small Cap Growth Fund (Continued)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 98.8% (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
MATERIALS -- 2.3%
Greif, Inc. - Class A 6,470 $ 424,561
Olin Corp. 14,225 275,965
- --------------------------------------------------------------------------------
700,526
- --------------------------------------------------------------------------------
MISCELLANEOUS -- 1.3%
iShares Russell 2000 Growth
Index Fund + 5,590 395,325
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 0.9%
NTELOS Holdings Corp. 10,245 275,488
- --------------------------------------------------------------------------------
UTILITIES -- 0.5%
ITC Holdings Corp. 2,920 151,168
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 30,371,969
- --------------------------------------------------------------------------------
INVESTMENT FUNDS -- 27.0%
BBH Securities Lending Fund ** 7,417,316 7,417,316
Touchstone Institutional
Money Market Fund^ 891,083 891,083
- --------------------------------------------------------------------------------
TOTAL INVESTMENT FUNDS $ 8,308,399
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 125.8%
(Cost $41,986,046) $ 38,680,368
LIABILITIES IN EXCESS OF OTHER ASSETS -- (25.8%) (7,930,124)
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 30,750,244
================================================================================
* Non-income producing security.
^ Affiliated Fund, sub-advised by Fort Washington Investment Advisors, Inc.
See Note 5.
+ All or a portion of the security is on loan. The total value of securities
on loan as of September 30, 2008, was $7,355,295.
** Represents collateral for securities loaned. See accompanying notes to
financial statements.
See accompanying notes to financial statements.
48
- --------------------------------------------------------------------------------
Portfolio of Investments
Growth Opportunities Fund - September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 99.6% SHARES VALUE
- --------------------------------------------------------------------------------
HEALTH CARE -- 28.6%
Adolor Corp.* 110,700 $ 381,915
Biogen Idec, Inc.* 22,500 1,131,525
Celgene Corp.* 25,125 1,589,910
Elan Corp. PLC - SPONS ADR* + 80,900 863,203
Gen-Probe, Inc.* 14,600 774,530
Immucor, Inc.* 21,900 699,924
Masimo Corp.* + 21,200 788,640
OSI Pharmaceuticals, Inc.* + 21,900 1,079,451
Santarus, Inc.* 61,000 123,830
Shire PLC - ADR 15,900 759,225
Thermo Fisher Scientific, Inc.* + 15,900 874,500
Vertex Pharmaceuticals, Inc.* 17,900 594,996
Wyeth 18,600 687,084
- --------------------------------------------------------------------------------
10,348,733
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 28.4%
ACI Worldwide, Inc.* 27,200 476,544
Alliance Data Systems Corp.* + 13,300 842,954
Apple, Inc.* 4,000 454,640
Autodesk, Inc.* 24,500 821,975
Check Point Software
Technologies Ltd.* 34,500 784,530
EMC Corp.* + 56,400 674,544
Google, Inc.* 1,750 700,910
Hewlett-Packard Co. 18,600 860,064
Microsoft Corp. + 27,200 725,968
NetApp, Inc.* + 18,600 339,078
Nuance Communications, Inc.* 51,700 630,223
Oracle Corp.* 43,800 889,578
Polycom, Inc.* 20,600 476,478
QUALCOMM, Inc. 23,900 1,026,983
SkillSoft PLC - ADR* 59,400 621,324
- --------------------------------------------------------------------------------
10,325,793
- --------------------------------------------------------------------------------
CONSUMER STAPLES -- 11.7%
Church & Dwight Co., Inc. + 17,200 1,067,948
CVS Caremark Corp. + 32,500 1,093,950
Wal-Mart Stores, Inc. 21,200 1,269,668
Whole Foods Market, Inc. + 41,100 823,233
- --------------------------------------------------------------------------------
4,254,799
- --------------------------------------------------------------------------------
ENERGY -- 8.4%
Exterran Holdings, Inc.* 8,600 274,856
Hess Corp. 6,600 541,728
National-Oilwell Varco, Inc.* 15,900 798,657
Smith International, Inc. 11,900 697,816
Weatherford International Ltd.* 29,200 734,088
- --------------------------------------------------------------------------------
3,047,145
- --------------------------------------------------------------------------------
INDUSTRIALS -- 8.1%
AMETEK, Inc. 17,950 731,822
Geo Group, Inc.* 25,200 509,292
IDEX Corp. 16,900 524,238
ITT Corp. 12,600 700,686
MSC Industrial Direct Co., Inc. + 10,600 488,342
- --------------------------------------------------------------------------------
2,954,380
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 6.3%
Bed Bath & Beyond, Inc.* 24,500 769,545
DeVry, Inc. 16,600 822,364
Kohl's Corp.* 15,300 705,024
- --------------------------------------------------------------------------------
2,296,933
- --------------------------------------------------------------------------------
MATERIALS -- 5.0%
Monsanto Co. 11,300 1,118,474
Praxair, Inc. 9,900 710,226
- --------------------------------------------------------------------------------
1,828,700
- --------------------------------------------------------------------------------
FINANCIALS -- 3.1%
Charles Schwab Corp. + 33,800 878,800
National City Corp. + 139,900 244,825
- --------------------------------------------------------------------------------
1,123,625
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 36,180,108
- --------------------------------------------------------------------------------
INVESTMENT FUND -- 25.0%
BBH Securities Lending Fund ** 9,105,852 $ 9,105,852
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 124.6%
(Cost $45,293,672) $ 45,285,960
LIABILITIES IN EXCESS OF OTHER ASSETS -- (24.6%) (8,933,299)
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 36,352,661
================================================================================
* Non-income producing security.
+ All or a portion of the security is on loan. The total value of securities
on loan as of September 30, 2008, was $9,313,955.
** Represents collateral for securities loaned.
ADR American Depository Receipt.
See accompanying notes to financial statements.
49
- --------------------------------------------------------------------------------
Portfolio of Investments
Large Cap Core Equity Fund - September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 97.9% SHARES VALUE
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 20.3%
Amphenol Corp. 22,722 $ 912,061
Applied Materials 122,124 1,847,736
Cisco Systems, Inc.* 84,903 1,915,411
Hewlett-Packard Co. 34,496 1,595,095
Intel Corp. 73,415 1,375,063
Microsoft Corp. + 85,957 2,294,191
Oracle Corp.* 68,576 1,392,779
QUALCOMM, Inc. 40,016 1,719,488
Western Union Co.* 31,061 766,275
- --------------------------------------------------------------------------------
13,818,099
- --------------------------------------------------------------------------------
FINANCIALS -- 15.3%
AFLAC, Inc. 29,844 1,753,335
Allstate Corp. 23,970 1,105,496
American Express Co. 37,000 1,310,910
JPMorgan Chase & Co. 31,561 1,473,899
Lincoln National Corp. 32,317 1,383,491
Wells Fargo & Co. + 91,987 3,452,272
- --------------------------------------------------------------------------------
10,479,403
- --------------------------------------------------------------------------------
INDUSTRIALS -- 14.5%
Caterpillar, Inc. 21,436 1,277,586
Danaher Corp. + 14,538 1,008,937
Emerson Electric Co. 22,429 914,879
General Electric Co. 40,519 1,033,235
Honeywell International, Inc. 14,822 615,854
Illinois Tool Works, Inc. 31,599 1,404,576
Union Pacific Corp. + 20,580 1,464,473
United Technologies Corp. 36,054 2,165,402
- --------------------------------------------------------------------------------
9,884,942
- --------------------------------------------------------------------------------
ENERGY -- 12.4%
Chevron Corp. 23,231 1,916,093
ConocoPhillips 24,835 1,819,164
Ensco International, Inc. + 14,835 854,941
Marathon Oil Corp. 45,552 1,816,158
Transocean, Inc.* 7,574 831,928
XTO Energy, Inc. 26,976 1,254,924
- --------------------------------------------------------------------------------
8,493,208
- --------------------------------------------------------------------------------
CONSUMER STAPLES -- 11.8%
Altria Group, Inc. 34,759 689,619
CVS Caremark Corp. 28,472 958,368
Kimberly-Clark Corp. 23,957 1,553,372
Kraft Foods, Inc. - Class A 50,247 1,645,588
Pepsico, Inc. 22,519 1,604,929
Philip Morris International, Inc. 33,839 1,627,656
- --------------------------------------------------------------------------------
8,079,532
- --------------------------------------------------------------------------------
HEALTH CARE -- 9.3%
Cardinal Health, Inc. 28,055 1,382,550
Laboratory Corp. of
America Holdings* + 21,407 1,487,787
McKesson Corp. 19,793 1,065,061
Novartis AG - ADR 19,039 1,006,021
WellPoint, Inc.* 30,978 1,448,841
- --------------------------------------------------------------------------------
6,390,260
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 7.8%
Best Buy Co., Inc. 45,735 1,715,063
Honda Motor Co., Ltd. 33,082 996,099
McDonald's Corp. 12,442 767,671
Target Corp. 38,481 1,887,493
- --------------------------------------------------------------------------------
5,366,326
- --------------------------------------------------------------------------------
UTILITIES -- 2.9%
Dominion Resources, Inc. 46,628 1,994,746
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 2.3%
AT&T, Inc. 56,612 1,580,607
- --------------------------------------------------------------------------------
MATERIALS -- 1.3%
Praxair, Inc. 12,136 870,637
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 66,957,760
- --------------------------------------------------------------------------------
INVESTMENT FUNDS -- 11.8%
BBH Securities Lending Fund ** 7,283,232 7,283,232
Touchstone Institutional Money Market Fund^ 765,437 765,437
- --------------------------------------------------------------------------------
TOTAL INVESTMENT FUNDS $ 8,048,669
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 109.7%
(Cost $78,175,662) $ 75,006,429
LIABILITIES IN EXCESS OF OTHER ASSETS -- (9.7%) (6,631,768)
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 68,374,661
================================================================================
* Non-income producing security.
^ Affiliated Fund, sub-advised by Fort Washington Investment Advisors, Inc.
See Note 5.
+ All or a portion of the security is on loan. The total value of securities
on loan as of September 30, 2008, was $7,612,685.
** Represents collateral for securities loaned.
ADR American Depository Receipt.
See accompanying notes to financial statements.
50
- --------------------------------------------------------------------------------
Portfolio of Investments
Large Cap Growth Fund - September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 93.4% SHARES VALUE
- -------------------------------------------------------------------------------
CONSUMER STAPLES -- 19.2%
Campbell Soup Co. 545,331 $ 21,049,777
Colgate-Palmolive Co. 555,585 41,863,330
General Mills, Inc. 658,450 45,248,684
Heinz (H.J.) Co. 793,700 39,613,567
PepsiCo, Inc. 465,070 33,145,539
Wal-Mart Stores, Inc. 762,700 45,678,102
- -------------------------------------------------------------------------------
226,598,999
- -------------------------------------------------------------------------------
HEALTH CARE -- 18.2%
Alcon, Inc. 162,435 26,234,877
Baxter International, Inc. 570,465 37,439,618
Express Scripts, Inc.* + 620,095 45,775,413
Genzyme Corp.* 518,400 41,933,376
Gilead Sciences, Inc.* 781,305 35,611,882
Intuitive Surgical, Inc.* + 111,600 26,893,368
- -------------------------------------------------------------------------------
213,888,534
- -------------------------------------------------------------------------------
INDUSTRIALS -- 16.3%
CSX Corp. + 788,660 43,037,176
First Solar, Inc.* + 117,860 22,264,933
L-3 Communications Holdings, Inc. 256,700 25,238,744
Lockheed Martin Corp. 362,100 39,711,507
SunPower Corp. - Class A* + 344,735 24,452,054
Union Pacific Corp. 522,083 37,151,426
- -------------------------------------------------------------------------------
191,855,840
- -------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 15.0%
Apple, Inc.* 229,435 26,077,582
Baidu.com, Inc. - SPON ADR* 89,335 22,175,627
Mastercard, Inc. + 208,365 36,949,366
Oracle Corp.* 1,509,180 30,651,446
QUALCOMM, Inc. + 801,120 34,424,126
Research In Motion Ltd.* + 382,000 26,090,600
- -------------------------------------------------------------------------------
176,368,747
- -------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 9.5%
Amazon.com, Inc.* + 450,150 32,752,914
McDonald's Corp. 663,445 40,934,557
Nike, Inc. - Class B 575,400 38,494,260
- -------------------------------------------------------------------------------
112,181,731
- -------------------------------------------------------------------------------
FINANCIALS -- 8.0%
AFLAC, Inc. 533,290 31,330,788
Leucadia National Corp.* 706,900 32,121,535
Public Storage 62,623 6,200,303
State Street Corp. 421,620 23,981,746
- -------------------------------------------------------------------------------
93,634,372
- -------------------------------------------------------------------------------
MATERIALS -- 5.7%
Ecolab, Inc. 343,200 16,652,064
Potash Corp. of Saskatchewan, Inc. 153,785 20,301,158
Praxair, Inc. 415,425 29,802,589
- -------------------------------------------------------------------------------
66,755,811
- -------------------------------------------------------------------------------
ENERGY -- 1.5%
Cameron International Corp.* + 450,135 17,348,203
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 1,098,632,237
- -------------------------------------------------------------------------------
INVESTMENT FUNDS -- 25.0%
BBH Securities Lending Fund ** 232,401,090 232,401,090
Touchstone Institutional Money Market Fund^ 61,852,304 61,852,304
- -------------------------------------------------------------------------------
TOTAL INVESTMENT FUNDS $ 294,253,394
- -------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 118.4%
(Cost $1,406,138,002) $ 1,392,885,631
LIABILITIES IN EXCESS OF OTHER ASSETS -- (18.4%) (216,287,115)
- -------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 1,176,598,516
===============================================================================
* Non-income producing security.
^ Affiliated Fund, sub-advised by Fort Washington Investment Advisors, Inc.
See Note 5.
+ All or a portion of the security is on loan. The total value of securities
on loan as of September 30, 2008, was $200,601,064.
** Represents collateral for securities loaned.
ADR American Depository Receipt.
See accompanying notes to financial statements.
51
- --------------------------------------------------------------------------------
Portfolio of Investments
Large Cap Value Fund - September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
MARKET
PREFERRED STOCK -- 0.8% SHARES VALUE
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 0.8%
General Motors Corp. 12,600 $ 112,014
- --------------------------------------------------------------------------------
FINANCIALS -- 0.0%
Washington Mutual, Inc. 2,500 1,000
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS $ 113,014
- --------------------------------------------------------------------------------
COMMON STOCKS -- 98.0%
FINANCIALS -- 28.2%
American International Group, Inc. + 22,100 73,593
Bank of America Corp. 22,300 780,500
Citigroup, Inc. 55,900 1,146,508
Genworth Financial, Inc. 95,247 820,077
Huntington Bancshares, Inc. + 21,600 172,584
JPMorgan Chase & Co. 10,600 495,020
KeyCorp + 41,800 499,092
Wachovia Corp. + 47,700 166,950
- --------------------------------------------------------------------------------
4,154,324
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 23.2%
Centex Corp. 57,000 923,400
D.R. Horton, Inc. 79,800 1,038,996
General Motors Corp. + 33,300 314,685
J.C. Penney Co., Inc. 14,900 496,766
Pulte Homes, Inc. 45,800 639,826
- --------------------------------------------------------------------------------
3,413,673
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 17.6%
Alcatel - Lucent - ADR* 197,000 756,480
AU Optronics Corp. - ADR + 26,632 302,540
BearingPoint, Inc.* + 466,900 242,788
Dell, Inc.* 38,200 629,536
Motorola, Inc. 79,600 568,344
Nortel Networks Corp.* + 40,650 91,056
- --------------------------------------------------------------------------------
2,590,744
- --------------------------------------------------------------------------------
INDUSTRIALS -- 5.5%
Navistar International Corp.* 14,900 807,282
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES -- 5.4%
Sprint Nextel Corp.* 129,800 791,780
- --------------------------------------------------------------------------------
MISCELLANEOUS -- 4.3%
iShares Dow Jones
US Home Construction + 30,700 551,372
SPDR S&P Homebuilders ETF 4,000 78,280
- --------------------------------------------------------------------------------
629,652
- --------------------------------------------------------------------------------
UTILITIES -- 4.1%
Mirant Corp.* 1,700 31,093
Reliant Energy, Inc.* 77,600 570,360
- --------------------------------------------------------------------------------
601,453
- --------------------------------------------------------------------------------
ENERGY -- 3.6%
Peabody Energy Corp. 11,900 535,500
- --------------------------------------------------------------------------------
HEALTH CARE -- 3.4%
Sanofi-Aventis - ADR 15,300 502,911
- --------------------------------------------------------------------------------
MATERIALS -- 1.5%
AbitibiBowater, Inc.* + 56,003 216,732
- --------------------------------------------------------------------------------
CONSUMER STAPLES -- 1.2%
Tyson Foods, Inc. 14,900 177,906
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 14,421,957
- --------------------------------------------------------------------------------
INVESTMENT FUNDS -- 22.2%
BBH Securities Lending Fund ** 2,698,547 2,698,547
Touchstone Institutional Money Market Fund^ 561,915 561,915
- --------------------------------------------------------------------------------
TOTAL INVESTMENT FUNDS $ 3,260,462
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 121.0%
(Cost $30,313,343) $ 17,795,433
LIABILITIES IN EXCESS OF OTHER ASSETS -- (21.0%) (3,084,402)
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 14,711,031
================================================================================
* Non-income producing security.
^ Affiliated Fund, sub-advised by Fort Washington Investment Advisors, Inc.
See Note 5.
+ All or a portion of the security is on loan. The total value of securities
on loan as of September 30, 2008, was $2,404,215.
** Represents collateral for securities loaned.
ADR American Depository Receipt.
See accompanying notes to financial statements.
52
- --------------------------------------------------------------------------------
Portfolio of Investments
Micro Cap Growth Fund - September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 99.6% SHARES VALUE
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 36.1%
Actuate Corp.* 159,600 $ 558,600
Avanex Corp.* 980 4,586
BSQUARE Corp.* 126,700 453,586
Concur Technologies, Inc.* + 33,000 1,262,580
CyberSource Corp.* + 85,000 1,369,350
DG Fastchannel, Inc.* 32,300 708,016
Digital Ally, Inc.* 6,600 45,342
Ebix, Inc.* + 6,700 629,532
GSI Technology, Inc.* 89,200 318,444
iGate Capital Corp.* 86,300 748,221
Image Sensing Systems, Inc.* 1,300 14,365
Integrated Silicon Solution, Inc.* 42,893 99,083
INX, Inc.* 2,973 20,187
Mastech Holdings, Inc.* 5,753 43,725
Mesa Laboratories, Inc. 24,900 529,125
NetScout Systems, Inc.* 51,000 542,640
PC Connection, Inc.* 29,100 194,679
Pericom Semiconductor Corp.* 57,300 601,650
Photon Dynamics, Inc.* 32,784 503,234
TransAct Technologies, Inc.* 33,100 263,476
Versant Corp.* 4,700 90,992
Vocus, Inc.* 19,500 662,220
- --------------------------------------------------------------------------------
9,663,633
- --------------------------------------------------------------------------------
HEALTH CARE -- 23.4%
Allion Healthcare, Inc.* 84,500 502,775
Almost Family, Inc.* 37,500 1,483,125
American Medical Alert Corp.* 80,100 402,903
ATRION Corp. 1,500 154,545
Bio-Imaging Technologies, Inc.* 21,500 165,980
CryoLife, Inc.* 32,200 422,464
Cynosure, Inc. - Class A* 29,600 531,024
HMS Holdings Corp.* 53,000 1,269,880
Synovis Life Technologies, Inc.* 50,200 944,764
U.S. Physical Therapy, Inc.* 23,100 401,016
- --------------------------------------------------------------------------------
6,278,476
- --------------------------------------------------------------------------------
INDUSTRIALS -- 20.6%
Advanced Battery Technologies, Inc.* + 62,100 200,583
Alamo Group, Inc. 700 11,935
AZZ, Inc.* 7,800 322,686
Chase Corp.* 14,400 180,000
Ducommun, Inc. 13,300 317,604
Furmanite Corp.* 82,100 854,661
Graham Corp. + 16,400 887,240
Industrial Services of America, Inc. + 9,800 100,450
Key Technology, Inc.* 31,100 737,070
K-Tron International, Inc.* + 7,000 901,810
L. B. Foster Co.* 10,500 319,410
LS Starrett Co. - Class A 4,500 82,935
Peerless Manufacturing Co.* 5,600 81,144
Standard Parking Corp.* 22,800 506,616
- --------------------------------------------------------------------------------
5,504,144
- --------------------------------------------------------------------------------
FINANCIALS -- 7.9%
American Physicians Capital, Inc. + 30,000 1,269,900
Life Partners Holdings, Inc. + 23,201 834,540
- --------------------------------------------------------------------------------
2,104,440
- --------------------------------------------------------------------------------
ENERGY -- 4.5%
Clayton Williams Energy, Inc.* 12,000 846,360
Matrix Service Co.* 19,300 368,630
- --------------------------------------------------------------------------------
1,214,990
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 4.3%
America's Car-Mart, Inc.* + 12,900 239,811
Learning Tree International, Inc.* 53,500 666,075
Smith & Wesson Holding Corp.* + 67,100 250,954
- --------------------------------------------------------------------------------
1,156,840
- --------------------------------------------------------------------------------
MATERIALS -- 2.6%
Innophos Holdings, Inc. 17,700 431,526
Quaker Chemical Corp. 3,100 88,226
UFP Technologies, Inc.* 24,850 169,229
- --------------------------------------------------------------------------------
688,981
- --------------------------------------------------------------------------------
UTILITIES -- 0.2%
Maine & Maritimes Corp.* 1,700 56,015
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 26,667,519
- --------------------------------------------------------------------------------
INVESTMENT FUNDS -- 22.5%
BBH Securities Lending Fund ** 5,721,855 5,721,855
Touchstone Institutional Money Market Fund^ 302,146 302,146
- --------------------------------------------------------------------------------
TOTAL INVESTMENT FUNDS $ 6,024,001
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 122.1%
(Cost $26,921,670) $ 32,691,520
LIABILITIES IN EXCESS OF OTHER ASSETS -- (22.1%) (5,915,404)
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 26,776,116
================================================================================
* Non-income producing security.
^ Affiliated Fund, sub-advised by Fort Washington Investment Advisors, Inc.
See Note 5.
+ All or a portion of the security is on loan. The total value of securities
on loan as of September 30, 2008, was $5,789,946.
** Represents collateral for securities loaned.
See accompanying notes to financial statements.
53
- --------------------------------------------------------------------------------
Portfolio of Investments
Mid Cap Growth Fund - September 30, 2008 (Unaudited)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 97.5% SHARES VALUE
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY -- 22.2%
ADC Telecommunications, Inc.* + 456,500 $ 3,857,425
Agilent Technologies, Inc.* 198,200 5,878,612
Alliance Data Systems Corp.* + 186,100 11,795,018
Analog Devices, Inc. 299,700 7,897,095
Autodesk, Inc.* 352,500 11,826,375
Avnet, Inc.* 230,800 5,684,604
BMC Software, Inc.* 386,800 11,074,084
Broadcom Corp. - Class A* + 414,100 7,714,683
Cognizant Technology Solutions Corp.* 455,400 10,396,782
LSI Logic Corp.* + 350,796 1,880,267
Marvell Technology Group Ltd.* 416,200 3,870,660
Maxim Integrated Products, Inc. 613,900 11,111,590
MEMC Electronic Materials, Inc.* 323,150 9,132,219
Mettler-Toledo International, Inc.* 200,700 19,668,600
NetApp, Inc.* + 538,600 9,818,678
NICE Systems Ltd. - SPONS ADR* 528,800 14,404,512
PMC-Sierra, Inc.* + 871,500 6,466,530
Quest Software, Inc.* 626,700 7,952,823
Red Hat, Inc.* + 153,300 2,310,231
SAIC, Inc.* 558,200 11,292,386
TeleTech Holdings, Inc.* 386,800 4,811,792
Verigy Ltd.* 316,151 5,146,938
VistaPrint Ltd.* + 406,400 13,346,176
Zebra Technologies Corp.* + 266,515 7,422,443
- --------------------------------------------------------------------------------
204,760,523
- --------------------------------------------------------------------------------
HEALTH CARE -- 19.6%
Beckman Coulter, Inc. + 93,900 6,665,961
Celgene Corp.* 325,600 20,603,967
Cerner Corp.* + 95,900 4,280,976
DaVita, Inc.* 255,350 14,557,504
Dentsply International, Inc. 313,400 11,765,036
Edwards Lifesciences Corp.* + 202,550 11,699,288
Elan Corp. PLC - SPONS ADR* + 1,026,400 10,951,688
HEALTHSOUTH Corp.* + 368,460 6,790,718
Hospira, Inc.* 134,340 5,131,788
IDEXX Laboratories, Inc.* + 183,650 10,064,020
Invitrogen Corp.* + 233,300 8,818,740
Pediatrix Medical Group, Inc.* 197,795 10,665,106
QIAGEN N.V.* 419,900 8,284,627
Shire Pharmaceuticals Group PLC - ADR + 347,600 16,597,900
Thermo Fisher Scientific, Inc.* + 167,450 9,209,750
Varian, Inc.* + 139,395 5,980,046
VCA Antech, Inc.* + 160,500 4,729,935
Vertex Pharmaceuticals, Inc.* 435,800 14,485,992
- --------------------------------------------------------------------------------
181,283,042
- --------------------------------------------------------------------------------
INDUSTRIALS -- 13.9%
Alliant Techsystems, Inc.* 86,635 8,138,492
AMETEK, Inc. 190,950 7,785,032
Corrections Corp. of America* 509,200 12,653,619
Dover Corp. 194,790 7,898,735
Hexcel Corp.* 449,195 6,149,480
IDEX Corp. 276,600 8,580,132
ITT Corp. 210,500 11,705,905
Joy Global, Inc. 119,090 5,375,723
Kirby Corp.* + 264,400 10,031,336
MSC Industrial Direct Co., Inc. + 347,600 16,013,931
Rockwell Collins 160,345 7,710,991
SPX Corp. 91,440 7,040,880
Teleflex, Inc. 169,087 10,735,334
Textron, Inc. 303,600 8,889,408
- --------------------------------------------------------------------------------
128,708,998
- --------------------------------------------------------------------------------
FINANCIALS -- 12.9%
Annaly Capital Management, Inc. + 754,000 10,141,300
Arch Capital Group, Ltd.* 127,900 9,340,537
Assurant, Inc. 165,280 9,090,400
Colonial Bancgroup, Inc. + 75,629 594,444
Federated Investors, Inc. - Class B + 214,700 6,189,801
Fifth Third Bancorp. + 706,725 8,410,028
First Horizon National Corp. + 283,291 2,691,260
Hudson City Bancorp, Inc. + 317,455 5,857,045
Invesco Ltd. 199,535 4,186,244
Knight Capital Group, Inc.* + 498,555 7,408,527
Marshall & Ilsley Corp. + 254,600 5,130,190
Moody's Corp. + 216,100 7,347,400
New York Community Bancorp, Inc. + 453,842 7,620,007
People's United Financial, Inc. + 644,354 12,403,814
SVB Financial Group* + 200,700 11,624,544
Willis Group Holdings Ltd. + 330,189 10,651,897
- --------------------------------------------------------------------------------
118,687,438
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY -- 11.3%
Bed Bath & Beyond, Inc.* + 377,000 11,841,570
Burger King Holdings, Inc. 141,307 3,470,500
D.R. Horton, Inc. 465,200 6,056,904
DeVry, Inc. 244,800 12,127,391
Gap, Inc. + 222,900 3,963,162
Lennar Corp. + 250,200 3,800,538
Limited Brands, Inc. 607,100 10,514,972
Macy's, Inc. + 398,774 7,169,957
Newell Rubbermaid, Inc. 607,100 10,478,546
Regis Corp. 294,424 8,096,660
Snap-On, Inc. 149,780 7,887,415
The TJX Cos., Inc. 187,000 5,707,240
Toll Brothers, Inc.* + 165,900 4,185,657
WABCO Holdings, Inc. 244,130 8,676,380
- --------------------------------------------------------------------------------
103,976,892
- --------------------------------------------------------------------------------
ENERGY -- 10.7%
BJ Services Co. 426,000 8,149,380
Cameron International Corp.* + 159,100 6,131,714
CONSOL Energy, Inc. 341,500 15,671,435
Hess Corp. + 191,000 15,677,280
Murphy Oil Corp. 110,520 7,088,753
Nabors Industries, Ltd.* 357,400 8,906,408
54
- --------------------------------------------------------------------------------
Mid Cap Growth Fund (Continued)
- --------------------------------------------------------------------------------
MARKET
COMMON STOCKS -- 97.5% (CONTINUED) SHARES VALUE
- --------------------------------------------------------------------------------
ENERGY -- 10.7% (CONTINUED)
National-Oilwell Varco, Inc.* 214,130 $ 10,755,750
Range Resources Corp. 186,100 7,978,107
Smith International, Inc. 205,600 12,056,384
Weatherford International Ltd.* 241,200 6,063,768
- --------------------------------------------------------------------------------
98,478,979
- --------------------------------------------------------------------------------
MATERIALS -- 4.6%
Commercial Metals Co. 316,900 5,352,441
Crown Holdings, Inc.* 455,350 10,113,324
Cytec Industries, Inc. 165,315 6,432,407
International Flavors &
Fragrances, Inc. 211,600 8,349,736
Pactiv Corp.* 480,400 11,928,331
- --------------------------------------------------------------------------------
42,176,239
- --------------------------------------------------------------------------------
UTILITIES -- 1.4%
Equitable Resources, Inc. 220,300 8,082,807
Wisconsin Energy Corp. 109,700 4,925,530
- --------------------------------------------------------------------------------
13,008,337
- --------------------------------------------------------------------------------
CONSUMER STAPLES -- 0.9%
Tyson Foods, Inc. - Class A + 714,790 8,534,593
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS $ 899,615,041
- --------------------------------------------------------------------------------
INVESTMENT FUNDS -- 27.4%
BBH Securities Lending Fund ** 214,302,210 214,302,210
Touchstone Institutional Money Market Fund^ 39,021,344 39,021,344
- --------------------------------------------------------------------------------
TOTAL INVESTMENT FUNDS $ 253,323,554
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 124.9%
(Cost $1,183,675,811) $ 1,152,938,595
LIABILITIES IN EXCESS OF OTHER
ASSETS -- (24.9%) (229,997,240)
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 922,941,355
================================================================================
* Non-income producing security.
^ Affiliated Fund, sub-advised by Fort Washington Investment Advisors, Inc.
See Note 5.
+ All or a portion of the security is on loan. The total value of securities
on loan as of September 30, 2008, was $219,673,700.
** Represents collateral for securities loaned.
ADR American Depository Receipt.
See accompanying notes to financial statements.
55
- --------------------------------------------------------------------------------
Other Items (Unaudited)
- --------------------------------------------------------------------------------
PROXY VOTING
The Sub-Advisors are responsible for exercising the voting rights associated
with the securities purchased and held by the Funds. A description of the
policies and procedures that the Sub-Advisors use in fulfilling this
responsibility and information regarding how those proxies were voted during the
twelve month period ended June 30 are available without charge upon request by
calling toll free 1.800.543.0407. These items are also available on the
Securities and Exchange Commission's (the Commission) Website at
http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The Trust files a complete listing of portfolio holdings for each Fund as of the
end of the first and third quarters of each fiscal year on Form N-Q. The
complete listing (i) is available on the Commission's Website; (ii) may be
reviewed and copied at the Commission's Public Reference Room in Washington, DC;
and (iii) will be made available to shareholders upon request by calling
1.800.543.0407. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
SCHEDULE OF SHAREHOLDER EXPENSES
As a shareholder of the Funds, you incur two types of costs: (1) transaction
costs, including reinvested dividends or other distributions; and (2) ongoing
costs, including investment advisory fees; distribution (12b-1) fees; and other
Fund expenses. This example is intended to help you understand your ongoing
costs (in dollars) of investing in the Funds and to compare these costs with the
ongoing costs of investing in other mutual funds.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Six
Months Ended September 30, 2008" to estimate the expenses you paid on your
account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Funds' actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Funds' actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
56
- --------------------------------------------------------------------------------
Other Items (Continued)
- --------------------------------------------------------------------------------
SCHEDULE OF SHAREHOLDER EXPENSES (CONTINUED)
EXPENSES
PAID
NET EXPENSE BEGINNING ENDING DURING THE
RATIO ACCOUNT ACCOUNT SIX MONTHS
ANNUALIZED VALUE VALUE ENDED
SEPTEMBER 30, APRIL 1, SEPTEMBER 30, SEPTEMBER 30,
2008 2008 2008 2008*
- -----------------------------------------------------------------------------------------------------------------
DIVERSIFIED SMALL CAP GROWTH FUND
Class A Actual 1.40% $ 1,000.00 $ 950.00 $ 6.85
Class A Hypothetical 1.40% $ 1,000.00 $ 1,018.05 $ 7.09
Class C Actual 2.15% $ 1,000.00 $ 947.70 $ 10.50
Class C Hypothetical 2.15% $ 1,000.00 $ 1,014.28 $ 10.86
Class Y Actual 1.15% $ 1,000.00 $ 950.20 $ 5.63
Class Y Hypothetical 1.15% $ 1,000.00 $ 1,019.30 $ 5.83
GROWTH OPPORTUNITIES FUND
Class A Actual 1.55% $ 1,000.00 $ 888.40 $ 7.32
Class A Hypothetical 1.55% $ 1,000.00 $ 1,017.31 $ 7.82
Class B Actual 2.30% $ 1,000.00 $ 892.00 $ 10.89
Class B Hypothetical 2.30% $ 1,000.00 $ 1,013.55 $ 11.59
Class C Actual 2.30% $ 1,000.00 $ 890.80 $ 10.89
Class C Hypothetical 2.30% $ 1,000.00 $ 1,013.55 $ 11.60
LARGE CAP CORE EQUITY FUND
Class A Actual 1.15% $ 1,000.00 $ 935.30 $ 5.58
Class A Hypothetical 1.15% $ 1,000.00 $ 1,019.30 $ 5.82
Class C Actual 1.90% $ 1,000.00 $ 932.00 $ 9.20
Class C Hypothetical 1.90% $ 1,000.00 $ 1,015.54 $ 9.60
LARGE CAP GROWTH FUND
Class A Actual 1.24% $ 1,000.00 $ 858.50 $ 5.80
Class A Hypothetical 1.24% $ 1,000.00 $ 1,018.83 $ 6.30
Class B Actual 1.99% $ 1,000.00 $ 858.50 $ 9.29
Class B Hypothetical 1.99% $ 1,000.00 $ 1,015.07 $ 10.07
Class C Actual 1.99% $ 1,000.00 $ 858.00 $ 9.28
Class C Hypothetical 1.99% $ 1,000.00 $ 1,015.08 $ 10.07
Class Y Actual 0.95% $ 1,000.00 $ 858.80 $ 4.43
Class Y Hypothetical 0.95% $ 1,000.00 $ 1,020.30 $ 4.82
LARGE CAP VALUE FUND
Class A Actual 1.35% $ 1,000.00 $ 528.90 $ 5.18
Class A Hypothetical 1.35% $ 1,000.00 $ 1,018.29 $ 6.84
Class C Actual 2.10% $ 1,000.00 $ 525.10 $ 8.04
Class C Hypothetical 2.10% $ 1,000.00 $ 1,014.53 $ 10.62
57
- --------------------------------------------------------------------------------
Other Items (Continued)
- --------------------------------------------------------------------------------
SCHEDULE OF SHAREHOLDER EXPENSES (CONTINUED)
EXPENSES
PAID
NET EXPENSE BEGINNING ENDING DURING THE
RATIO ACCOUNT ACCOUNT SIX MONTHS
ANNUALIZED VALUE VALUE ENDED
SEPTEMBER 30, APRIL 1, SEPTEMBER 30, SEPTEMBER 30,
2008 2008 2008 2008*
- --------------------------------------------------------------------------------------------------------
MICRO CAP GROWTH FUND
Class A Actual 1.58% $ 1,000.00 $ 964.80 $ 7.78
Class A Hypothetical 1.58% $ 1,000.00 $ 1,017.15 $ 7.99
Class C Actual 2.33% $ 1,000.00 $ 961.80 $ 11.46
Class C Hypothetical 2.33% $ 1,000.00 $ 1,013.39 $ 11.76
Class Y Actual 1.33% $ 1,000.00 $ 966.40 $ 6.56
Class Y Hypothetical 1.33% $ 1,000.00 $ 1,018.39 $ 6.74
MID CAP GROWTH FUND
Class A Actual 1.46% $ 1,000.00 $ 903.10 $ 6.98
Class A Hypothetical 1.46% $ 1,000.00 $ 1,017.73 $ 7.40
Class B Actual 2.25% $ 1,000.00 $ 899.60 $ 10.71
Class B Hypothetical 2.25% $ 1,000.00 $ 1,013.79 $ 11.35
Class C Actual 2.24% $ 1,000.00 $ 899.70 $ 10.65
Class C Hypothetical 2.24% $ 1,000.00 $ 1,013.86 $ 11.29
* Expenses are equal to the Fund's annualized expense ratio, multiplied by
the average account value over the period, multiplied by [number of days
in most recent fiscal half-year/365 [or366]] (to reflect the one-half year
period).
58
This page intentionally left blank.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOUCHSTONE INVESTMENTS
DISTRIBUTOR
Touchstone Securities, Inc.*
303 Broadway
Cincinnati, Ohio 45202-4203
800.638.8194
www.touchstoneinvestments.com
INVESTMENT ADVISOR
Touchstone Advisors, Inc.*
303 Broadway
Cincinnati, Ohio 45202-4203
TRANSFER AGENT
JPMorgan Chase Bank, N.A.
P.O. Box 5354 Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICE
800.543.0407
* A Member of Western & Southern Financial Group(R)
- --------------------------------------------------------------------------------
[LOGO] TOUCHSTONE (R)
INVESTMENTS
303 Broadway, Suite 1100
Cincinnati, OH 45202-4203
TSF-54-TST-SAR-0810
ITEM 2. CODE OF ETHICS.
Not required for Semiannual Reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required for Semiannual Reports.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required for Semiannual Reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
The Schedule of Investments in securities of unaffiliated issuers is included in
the Semiannual Report.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Governance Committee will consider shareholder recommendations for
nomination to the Board only in the event that there is a vacancy on the Board.
Shareholders who wish to submit recommendations for nominations to the Board to
fill the vacancy must submit their recommendations in writing to John P.
Zanotti, Chairman of the Governance Committee, c/o Touchstone, 303 Broadway,
Suite 1100, Cincinnati, OH 45202. Shareholders should include appropriate
information on the background and qualifications of any person recommended to
the Governance Committee (e.g., a resume), as well as the candidate's contact
information and a written consent from the candidate to serve if nominated and
elected. Shareholder recommendations for nominations to the Board will be
accepted on an ongoing basis and such recommendations will be kept on file for
consideration in the event of a future vacancy on the Board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the 1940 Act) the registrant's
principal executive officer and principal financial officer have concluded that
the registrant's disclosure controls and procedures are effective as of a date
within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during
the registrant's second fiscal half-year that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS.
(a)(2) Certifications required by Item 12(a)(2) of Form N-CSR are filed
herewith.
(b) Certification required by Item 11(b) of Form N-CSR is filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Touchstone Strategic Trust
--------------------------
By (Signature and Title)
/s/ Jill T. McGruder
- --------------------------------------------------------------------------------
Jill T. McGruder
President
Date: December 7, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)
/s/ Jill T. McGruder
- --------------------------------------------------------------------------------
Jill T. McGruder
President
Date: December 7, 2008
/s/ Terrie A. Wiedenheft
- --------------------------------------------------------------------------------
Terrie A. Wiedenheft
Controller & Treasurer
Date: December 3, 2008