UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive additional materials
|_| Soliciting material pursuant to ss.240.14a-12
Touchstone Funds Group Trust
--------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
TOUCHSTONE FUNDS GROUP TRUST
303 BROADWAY, SUITE 1100
CINCINNATI, OH 45202
Dear Valued Shareholder:
The proxy statement that accompanies this letter describes a proposal to approve
the adoption of a distribution plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Rule 12b-1 Plan"), for the Class Z shares
of the Touchstone Small Cap Value Fund. The Board of Trustees has approved this
proposal and unanimously recommends that you vote FOR the proposal.
Please read the proxy statement carefully. It explains the reasons for the
proposed Rule 12b-1 Plan.
Your vote is important regardless of how many shares you own. Please cast your
vote promptly using the enclosed card and postage-paid envelope, by phone using
the toll-free number, or via the Internet.
We appreciate your business and the trust you have placed in us. We look forward
to serving you for many years to come.
Sincerely,
/s/ Jill T. McGruder
Jill T. McGruder
President
Touchstone Funds Group Trust
1
TOUCHSTONE FUNDS GROUP TRUST
303 BROADWAY, SUITE 1100
CINCINNATI, OH 45202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 3, 2011
Notice is hereby given that a Special Meeting of Shareholders (the "Special
Meeting") of Touchstone Funds Group Trust (the "Trust") with respect to the
Class Z shares of the Touchstone Small Cap Value Fund (the "Fund") will be held
at the offices of the Trust, 303 Broadway Suite 1100, Cincinnati, OH 45202, at
10:00 a.m. Eastern Time, on June 3, 2011 for the purpose of approving the
adoption of a distribution plan for Class Z shares of the Fund pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended.
Shareholders of record as of the close of business on March 28, 2011 are
entitled to notice of, and to vote at the Special Meeting, or any adjournment of
this meeting.
Sincerely,
/s/ Jill T. McGruder
Jill T. McGruder
President
Touchstone Funds Group Trust
April 8, 2011
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. SHAREHOLDERS MAY ALSO
VOTE BY TELEPHONE OR VOTE THROUGH THE INTERNET. INSTRUCTIONS FOR THE PROPER
EXECUTION OF THE PROXY ARE SET FORTH IMMEDIATELY FOLLOWING THIS NOTICE OR, WITH
RESPECT TO TELEPHONE OR INTERNET VOTING, ON THE PROXY CARD. IT IS IMPORTANT THAT
YOU VOTE PROMPTLY.
2
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Trust in validating your vote if
you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration
on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
REGISTRATION VALID SIGNATURE
------------ ---------------
CORPORATE ACCOUNTS
------------------
(1) ABC Corp. ............................. ABC Corp.
(2) ABC Corp. ............................. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer ............... John Doe
(4) ABC Corp. Profit Sharing Plan ......... John Doe, Trustee
TRUST ACCOUNTS
--------------
(1) ABC Trust ............................. Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 ........................ Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
----------------------------
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA ......... John B. Smith
(2) Estate of John B. Smith ............... John B. Smith, Jr., Executor
3
TOUCHSTONE SMALL CAP VALUE FUND
OF THE
TOUCHSTONE FUNDS GROUP TRUST
303 Broadway, Suite 1100
Cincinnati, Ohio 45202
(800) 543-0407
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 3, 2011
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Board") of Touchstone Funds Group Trust (the
"Trust") from the shareholders of the Class Z shares of the Touchstone Small Cap
Value Fund (the "Fund"), a series of the Trust, for use at the special meeting
of shareholders to be held at 10:00 a.m. on June 3, 2011 (the "Meeting") and any
adjournment(s) thereof. The Meeting will be held at the offices of the Trust,
303 Broadway, Suite 1100, Cincinnati, Ohio 45202 for the purpose of approving
the adoption of a distribution plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Rule 12b-1 Plan").
This Proxy Statement is furnished to the shareholders of the Class Z shares of
the Fund. This Proxy Statement, the Notice of Special Meeting and the proxy
cards are being mailed to shareholders on or about April 8, 2011 or as soon as
practicable thereafter. Shareholders of record of the Fund as of the close of
business on March 28, 2011 (the "Record Date") will be entitled to one vote per
share for each full Class Z share of the Fund, with proportionate voting for
fractional shares.
Proxy solicitations will be made primarily by mail, but beginning on or about
April 15, 2011 proxy solicitations may also be made by telephone, or personal
solicitations may be conducted by officers and employees of Touchstone Advisors,
Inc. (the "Advisor"), its affiliates or other representatives of the Fund (who
will not be paid for their soliciting activities). In addition, proxy
solicitations may be made by Broadridge, the Fund's proxy solicitor. The
estimated cost of the proxy solicitation is approximately $8,800. The costs of
solicitation will be paid by the Advisor.
Any shareholder submitting a proxy has the power to revoke it by attending and
voting in person at the Meeting, by mailing a notice of revocation to the
Secretary of the Trust at the principal office of the Trust, or by executing a
superseding proxy by telephone or through the Internet to the Trust. All
properly executed proxies received before the Meeting will be voted as specified
in the Proxy.
A COPY OF THE TRUST'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2010
IS AVAILABLE FREE OF CHARGE, BY DOWNLOADING IT FROM THE TOUCHSTONE FUNDS'
WEBSITE, AT WWW.TOUCHSTONEINVESTMENTS.COM, BY CALLING 800-543-0407 OR BY WRITING
TO TOUCHSTONE FUNDS GROUP TRUST, TOUCHSTONE SMALL CAP VALUE FUND, 303 BROADWAY,
SUITE 900, CINCINNATI, OHIO 45202.
RECOMMENDATION OF THE BOARD OF TRUSTEES
On February 17, 2011, at a regular meeting, the Board of Trustees, including a
majority of the Trustees who are not "interested persons," as such term is
defined in the Investment Company Act of 1940, as amended ("1940 Act") (the
"Independent Trustees"), considered and unanimously approved, subject to
shareholder approval, the adoption of the Rule 12b-1 Plan for Class Z shares of
the Fund. As a result, the Board of Trustees of the Trust unanimously recommends
that shareholders of the Fund vote FOR the approval of the Rule 12b-1 Plan. A
discussion of the basis for the Board of Trustees' recommendation is included
below in the section entitled "Basis for the Board's Recommendation."
4
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE MEETING TO BE HELD ON JUNE 3, 2011.
THE PROXY STATEMENT AND RELATED MATERIALS ARE AVAILABLE AT:
https://www.touchstoneinvestments.com/home/ourcompany/proxyvoting.asp
SUMMARY OF THE PROPOSAL
You are being asked to approve the adoption of the Rule 12b-1 Plan for Class Z
shares of the Fund. Rule 12b-1 under the 1940 Act prohibits a mutual fund from
engaging directly or indirectly in financing any activity which is primarily
intended to result in the sale of the mutual fund's shares unless the mutual
fund does so in accordance with the terms and conditions set forth in Rule
12b-1. Rule 12b-1 requires any mutual fund bearing distribution expenses to
adopt a written plan. A Rule 12b-1 plan must initially be approved by the board
of trustees of a mutual fund, including a majority of the trustees who are not
"interested persons" of the mutual fund and who have no direct or indirect
financial interest in the operation of the plan or in any agreement related to
the plan. A Rule 12b-1 plan must also be approved by the affirmative vote of a
majority of outstanding voting securities of the Fund or class thereof to which
it will apply if it is adopted after any public offering of the mutual fund's
voting securities.
Under the proposed Rule 12b-1 Plan, Class Z shares of the Fund would pay for
distribution and shareholder services at an annual rate of up to 0.25% of
average daily net assets attributable to Class Z. Approval of the Rule 12b-1
Plan will not result in an increase in fees because the Rule 12b-1 Plan will
replace the existing shareholder service plan for Class Z shares of the Fund
("Shareholder Service Plan"). The Shareholder Service Plan allows the Fund to
pay compensation for shareholder services in an amount not to exceed 0.25% of
the average daily net assets of the Class Z shares of the Fund. The shareholder
services that will be provided pursuant to the Rule 12b-1 Plan are similar to
the shareholder services that the Class Z shares of the Fund currently receive
pursuant to the Shareholder Service Plan. While the proposed Rule 12b-1 Plan may
not provide an immediate advantage to shareholders over the current Shareholder
Service Plan, it may facilitate the conversion of the Class Z shares into Class
A shares. Upon the conversion of the Class Z shares into Class A shares, Class Z
shareholders will benefit from lower net expenses due to a contractual expense
limitation through January 27, 2013. Further, once the Class Z shares are
converted to Class A shares, the Class Z shareholders may benefit from economies
of scale and operating efficiencies. Class Z shareholders of the Fund will not
pay any initial sales charges in connection with the conversion to Class A
shares. Also, Class Z shareholders of the Fund that will have their shares
converted to Class A shares will not pay an intial sales charge on any additonal
purchases of Class A shares of the Fund. The fees and expenses for the fiscal
year ended September 30, 2010 for Class Z shares of the Fund and the pro forma
fees and expenses for Class Z shares of the Fund assuming approval of the Rule
12b-1 plan are shown in the section entitled "Fees and Expenses."
SUMMARY OF THE RULE 12B-1 PLAN
A description of the proposed Rule 12b-1 Plan is set forth below and is
qualified in its entirety by reference to Appendix A.
Under the terms of the Rule 12b-1 Plan, the Class Z shares of the Fund may
directly or indirectly bear expenses relating to the distribution of shares of
the Fund and for providing shareholder services. The Rule 12b-1 Plan provides
that the Fund's Class Z shares may pay Touchstone Securities, Inc. (the
"Distributor") up to, but not exceeding, twenty-five basis points (0.25%) of the
average daily net assets of the Class Z shares of the Fund for distribution
("Distribution Related Payments"). The Rule 12b-1 Plan further provides that the
Class Z shares of the Fund may pay for shareholder services in an amount up to
twenty-five basis points (0.25%) of the average daily net assets of the Class Z
shares ("Shareholder Services Related Payments"). The Shareholder Services
Related Payments will reduce the aggregate Distribution Related Payments
received by the Distributor by the amount of such Shareholder Services Related
Payments. Under the terms of the Rule 12b-1 Plan, the Distributor is authorized
to accept payments made to it and to make or direct payments on behalf of the
Fund to any shareholder servicing agent with which it has entered into a
shareholder servicing agreement or to any participating broker/dealer with which
it has entered into a broker agreement.
5
The Rule 12b-1 Plan is of a type known as a "compensation" plan because payments
are made for services rendered to the Trust with respect to Class Z shares of
the Fund regardless of the level of expenditures by the Distributor. The
Trustees will, however, take into account such expenditures for purposes of
reviewing operations under the Rule 12b-1 Plan and in connection with their
annual consideration of the Rule 12b-1 Plan's renewal.
The Distributor has indicated that it expects its expenditures to include, but
are not limited to: compensation to and expenses of employees of the Distributor
who engage in or support distribution of the shares; printing of prospectuses
and reports for other than existing shareholders; preparation, printing and
distribution of sales literature and advertising materials; and compensation to
broker/dealers who sell shares.
In addition, under the terms of the Rule 12b-1 Plan, the Distributor may use
payments to provide or enter into written agreements with service providers who
will provide shareholder services, including: (i) establishing and maintaining
customer accounts and records; (ii) aggregating and processing purchase and
redemption requests from customers and placing net purchase and redemption
orders with the Distributor; (iii) automatically investing customer account cash
balances; (iv) providing periodic statements to their customers; (v) arranging
for bank wires; (vi) answering routine customer inquiries concerning their
investments in the shares offered in connection with the Rule 12b-1 Plan and the
Fund's distribution agreement; (vii) assisting customers in changing dividend
options, account designations and addresses; (viii) performing sub-accounting
functions; (ix) processing dividend payments from the Fund on behalf of
customers; (x) forwarding certain shareholder communications from the Fund (such
as proxies, shareholder reports and dividend, distribution and tax notices) to
customers; and (xi) providing such other similar services as may be reasonably
requested to the extent they are permitted to do so under applicable statutes,
rules and regulations. The shareholder services that will be provided pursuant
to the Rule 12b-1 Plan are similar to the shareholder services that the Class Z
shares of the Fund currently receive pursuant to the Shareholder Service Plan.
The Rule 12b-1 plan provides that the Board of Trustees must review, at least
quarterly, a written report of the amounts expended pursuant to the Rule 12b-1
Plan and the purposes for which such expenditures were made, including
commissions, advertising, printing, interest, carrying charges and allocated
overhead expenses.
The Rule 12b-1 Plan and any Rule 12b-1 related agreement that is entered into by
the Trust or the Distributor of the Class Z shares of the Fund in connection
with the Rule 12b-1 Plan will continue in effect for a term of one year.
Thereafter, the Rule 12b-1 Plan and any Rule 12b-1 related agreement will
continue so long as its continuance is specifically approved at least annually
by vote of a majority of the Trust's Board, and of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on the
Rule 12b-1 Plan or any Rule 12b-1 related agreement, as applicable.
In addition, the Rule 12b-1 Plan may be terminated as to Class Z shares of the
Fund at any time, without penalty, by vote of a majority of the outstanding
Class Z shares of the Fund or by vote of a majority of the Independent Trustees.
Any Rule 12b-1 related agreement may be terminated as to Class Z shares of the
Fund at any time, without payment of any penalty, by the vote of a majority of
the outstanding Class Z shares of the Fund or by vote of a majority of the
Independent Trustees, on not more than 60 days written notice to any other party
to the agreement, and such agreement shall terminate automatically in the event
of its assignment. The Rule 12b-1 Plan also provides that it may not be amended
to increase materially the amount of distribution expenses without the approval
of Class Z shareholders of the Fund.
6
CONVERSION OF SHARE CLASSES
If Class Z shareholders approve the Rule 12b-1 Plan, then all Class Z shares of
the Fund will be converted to Class A shares of the Fund on or about June 10,
2011. Class A shares of the Fund are also subject to a distribution plan
pursuant to Rule 12b-1 ("Class A Plan"). The Class A Plan is identical to the
proposed Rule 12b-1 Plan for the Class Z shares. Class Z shareholders of the
Fund will not pay any initial sales charges in connection with the conversion to
Class A shares. Also, Class Z shareholders of the Fund that will have their
shares converted to Class A shares will not pay an intial sales charge on any
additonal purchases of Class A shares of the Fund.
FEES AND EXPENSES
The following table describes the fees and expenses for the fiscal year ended
September 30, 2010, for Class Z shares of the Fund, the pro forma fees and
expenses for Class Z shares of the Fund assuming the approval of the Rule 12b-1
Plan and the pro forma fees and expenses for Class A shares of the Fund assuming
conversion of Class Z shares of the Fund to Class A shares of the Fund. Pro
forma expense levels shown should not be considered an actual representation of
future expenses or performance. Such pro forma expense levels project
anticipated levels but actual expenses may be greater or less than those shown.
7
Shareholder Fees (fees paid directly from your investment)
--------------------------------------------------------------------------------------------------------
Class Z Class Z Pro Forma Class A Pro Forma
After Conversion
--------------------------------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases None None 5.75%(1)
(as a percentage of offering price)
--------------------------------------------------------------------------------------------------------
Wire Redemption Fee Up to $15 Up to $15 Up to $15
--------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses (expenses that you pay each year as a percentage
of the value of your investment)
--------------------------------------------------------------------------------------------------------
Class Z Class Z Pro Forma Class A Pro Forma
After Conversion
--------------------------------------------------------------------------------------------------------
Management Fees 0.95% 0.95% 0.95%
--------------------------------------------------------------------------------------------------------
Distribution and/or Service (12b-1) Fees None 0.25% 0.25%
--------------------------------------------------------------------------------------------------------
Other Expenses(2) 0.53% 0.53% 0.53%
--------------------------------------------------------------------------------------------------------
Shareholder Service Fees 0.25% 0.00% 0.00%
--------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.73% 1.73% 1.73%
--------------------------------------------------------------------------------------------------------
Fee Waiver and/or Expense Reimbursement(3) 0.23% 0.23% 0.30%
--------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses After 1.50% 1.50% 1.43%
Fee Waiver and/or Expense Reimbursement
--------------------------------------------------------------------------------------------------------
(1) Class Z shareholders of the Fund that will have their shares converted to
Class A shares will not pay an intial sales charge on any additonal
purchases of Class A shares of the Fund.
(2) "Other Expenses" for Class A shares are based on estimated amounts for the
current fiscal year.
(3) The Advisor and the Trust have entered into an expense limitation
agreement whereby the Advisor has contractually agreed to waive a portion
of its fees and/or reimburse certain Fund expenses in order to limit
annual fund operating expenses to 1.43% and 1.50% for Class A shares and
Class Z shares, respectively. These expense limitations will remain in
effect until at least January 27, 2013 but can be terminated by a vote of
the Board of Trustees of the Fund if they deem the termination to be
beneficial to the Fund shareholders. See the discussion entitled
"Contractual Fee Waiver Agreement" under the section entitled "The Fund's
Management" in the Fund's prospectus for more information.
Examples
The examples are intended to help you compare the cost of investing in the Class
Z shares, Class Z shares (Pro Forma), assuming the Rule 12b-1 Plan is approved,
and the Class A shares (Pro Forma) of the Fund, assuming conversion of Class Z
shares of the Fund to Class A shares of the Fund. The examples assume that you
invest $10,000 for the time periods indicated and then redeem all of your shares
at the end of those periods. The examples also assume that your investment has a
5% return each year and that the operating expenses remain the same. The
examples also assume that all expense limitations remain in effect for a one
year period. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
8
------------------------------------------------------------
CLASS Z
-------
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$153 $523 $917 $2,022
------------------------------------------------------------
------------------------------------------------------------
CLASS Z PRO FORMA
-----------------
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$153 $523 $917 $2,022
------------------------------------------------------------
------------------------------------------------------------
CLASS A PRO FORMA*
------------------
One Year Three Years Five Years Ten Years
-------- ----------- ---------- ---------
$146 $516 $910 $2,016
------------------------------------------------------------
* The Class A Pro Forma expense example does not include the initial sales
charge of the Class A shares because Class Z shareholders of the Fund that
will have their shares converted to Class A shares will not pay an intial
sales charge on any additonal purchases of Class A shares of the Fund.
BASIS FOR THE BOARD'S RECOMMENDATION
In evaluating and approving the Rule 12b-1 Plan, the Board, including the
Independent Trustees who have no direct or indirect financial interest in the
operation of the Rule 12b-1 Plan or any agreements related to the Rule 12b-1
Plan, in consultation with their independent legal counsel, requested and
evaluated information provided by the Advisor and the Distributor which, in the
Board's opinion, constituted all the information necessary for the Board to make
an informed determination about whether to approve the Rule 12b-1 Plan.
The Trustees noted that the net expenses of the Class Z shares of the Fund would
not change if the Rule 12b-1 Plan was approved. The Trustees also considered the
lower expenses and the potential economies of scale that might be achieved upon
the conversion of the Class Z shares into Class A shares upon the Class Z
shareholders' approval of the proposed Rule 12b-1 Plan In addition, the Trustees
considered, among other things:
1. the fact that the adoption of the Rule 12b-1 Plan was being proposed
in order to facilitate the conversion of Class Z shares into Class A
shares of the Fund;
2. the fact that the conversion of Class Z shares into Class A shares
will result in lower net expenses for the Class Z shareholders upon
conversion because the annual fund operating expenses of the Class A
shares are contractully limited to 1.43% through January 27, 2013;
3. the fact that Class Z shareholders of the Fund might benefit from
future economies of scale and operating efficiencies realized as a
result of the conversion of Class Z shares into Class A shares; and
4. the fact that the Rule 12b-1 Plan would require the Trustees be
provided, and that they review, on at least a quarterly basis, a
written report describing the amounts expended under the Rule 12b-1
Plan and the purposes for which such expenditures were made.
9
After consideration of the factors noted above, together with other factors and
information considered to be relevant, the Trustees concluded that there was a
reasonable likelihood that the Rule 12b-1 Plan would benefit the Fund and its
Class Z shareholders. Consequently, they unanimously approved the Rule 12b-1
Plan and directed that the Plan be submitted to Class Z shareholders of the Fund
for approval. The Trustees unanimously recommended that shareholders of the Fund
vote FOR the approval of the Rule 12b-1 Plan.
If the Rule 12b-1 Plan is not approved by the Class Z shareholders of the Fund,
Class Z shareholders will not pay any 12b-1 fees, the Shareholder Service Plan
will not be terminated, and the Class Z shares of the Fund will not be converted
to Class A shares of the Fund.
QUORUM & REQUIRED VOTE
For the Trust, except when a larger quorum is required by applicable law (as it
is in the case of the proposal as further discussed in the following paragraph),
the By-Laws or the Trust's Declaration of Trust, 40% of the shares entitled to
vote constitute a quorum at a shareholder's meeting. When any one or more series
(or classes) is to vote as a single class separate from any other shares, 40% of
the shares of each such series (or class) entitled to vote shall constitute a
quorum at a shareholder meeting of that series. Any shareholder meeting may be
adjourned by a majority of the votes cast upon the question of adjourning a
meeting to another date and time whether or not a quorum is present.
Approval of the Rule 12b-1 Plan will require the affirmative vote of a majority
of the outstanding voting securities of the Fund. Approval of the Rule 12b-1
Plan will require either the affirmative vote (a) of 67 percent or more of the
voting securities present at the Meeting, if the holders of more than 50 percent
of the outstanding voting securities of such company are present or represented
by proxy; or (b) of more than 50 percent of the outstanding voting securities of
such company, whichever is less. If sufficient votes to approve the Rule 12b-1
Plan are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of voting
instructions. In determining whether to adjourn the Meeting, the following
factors may be considered: the percentage of votes actually cast, the percentage
of negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. Any adjournment will require an affirmative vote of a majority of
those shares represented at the Meeting in person or by proxy. The persons named
as proxies will vote upon such adjournment after consideration of all
circumstances which may bear upon a decision to adjourn the Meeting.
Proxies that reflect abstentions and "broker non-votes" (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter) will be counted
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum, but will have the effect of being counted as votes against
the proposal of the Rule 12b-1 Plan, which must be approved in the manner
discussed in the preceding paragraph.
SHARES OUTSTANDING
At the close of business on the Record Date, the number of outstanding shares of
beneficial interest for the Class Z shares of the Fund was 3,462,988.
SHARE OWNERSHIP INFORMATION
As of the Record Date, the following table lists those shareholders who
beneficially owned 5% or more of the outstanding Class Z shares of the Fund.
10
Name and Address Number of Shares Percent of Shares
National Financial Services LLC 1,065,662 30.77%
200 Liberty St.
One World Financial Center
New York, NY 10281
Charles Schwab Co. Inc. 1,220,255 35.24%
4500 Cherry Creek
Denver, CO 80209
Special Custody Account for the 192,093 5.55%
Exclusive Benefit of its Customers
2801 Market Street
Saint Louis, MO 63103
As of the Record Date, the Trustees and Officers of the Trust as a group owned
of record and beneficially none of the outstanding Class Z shares of the Fund.
INVESTMENT ADVISOR AND OTHER SERVICE PROVIDERS
Touchstone Advisors, Inc. (the "Advisor"), located at 303 Broadway, Suite 1100,
Cincinnati, Ohio 45202, serves as the investment advisor to the Trust. The
Advisor also serves as the administrator for the Trust.
Touchstone Securities, Inc. (the "Distributor") serves as the principal
underwriter of the shares of the Trust. The address of the Underwriter is 303
Broadway, Suite 1100, Cincinnati, Ohio 45202.
Both the Advisor and the Distributor are wholly owned subsidiaries of IFS
Financial Services, Inc., which is a wholly owned subsidiary of Western-Southern
Life Assurance Company ("WSLAC"). WSLAC is a wholly owned subsidiary of The
Western and Southern Life Insurance Company, a stock life insurance company
organized under the laws of the State of Ohio on February 23, 1888 ("WSLIC").
WSLIC is wholly owned by an Ohio-domiciled intermediate holding company, Western
& Southern Financial Group, Inc. ("WSFG"). WSFG is wholly owned by an
Ohio-domiciled mutual insurance holding company, Western & Southern Mutual
Holding Company ("WSMH"). WSLAC is in the business of issuing insurance and
annuity contracts. The address of WSLAC, WSLIC, WSFG and WSMH is 400 Broadway,
Cincinnati, Ohio 45202.
The following officers of the Trust hold positions with the Advisor and the
Distributor:
---------------------------------------------------------------------------------------------------
NAME POSITION WITH THE POSITION WITH THE ADVISOR POSITION WITH THE DISTRIBUTOR
TRUST
---------------------------------------------------------------------------------------------------
Jill T. McGruder President and CEO and Director Director
Director
---------------------------------------------------------------------------------------------------
Steven M. Graziano Vice President President President
---------------------------------------------------------------------------------------------------
Terrie A. Wiedenheft Controller and Chief Financial Officer Chief Financial Officer
Treasurer
---------------------------------------------------------------------------------------------------
Brian E. Hirsch Vice President Senior Vice President Chief Compliance Officer
---------------------------------------------------------------------------------------------------
11
SUBMISSION OF SHAREHOLDER PROPOSALS
The Trust is not generally required to hold annual or special meetings of
shareholders. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholders' meeting should send their written
proposals to the Secretary of the Trust at the address set forth on the cover of
this Proxy Statement. Proposals received by the Trust in a reasonable period of
time prior to that meeting will be included in the proxy statement.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting. If other
business should properly come before the meeting, the proxy holders will vote
thereon in their discretion.
PLEASE COMPLETE THE ENCLOSED PROXY CARD(S) AND RETURN THE CARD(S) PROMPTLY IN
THE ENCLOSED SELF-ADDRESSED, POSTAGE-PAID ENVELOPE.
Sincerely,
/s/ Jill T. McGruder
Jill T. McGruder
President
Touchstone Funds Group Trust
12
APPENDIX A
TOUCHSTONE FUNDS GROUP TRUST
DISTRIBUTION AND SHAREHOLDER SERVICES PLAN
CLASS Z SHARES OF THE TOUCHSTONE SMALL CAP VALUE FUND
WHEREAS, Touchstone Funds Group Trust (the "Trust") is engaged in business
as an open-end investment company registered under the Investment Company Act of
1940 (the "1940 Act"); and
WHEREAS, the Trust, on behalf of the Touchstone Small Cap Value Fund (the
"Fund"), and Touchstone Securities, Inc. (the "Distributor") have entered into a
Distribution Agreement, pursuant to which the Fund will employ the Distributor
as distributor for the continuous offering of its shares; and
WHEREAS, the Trust desires to compensate the Distributor for providing the
distribution services described herein to shareholders (the "Shareholders") who
from time to time beneficially own shares of its common stock that are
classified and allocated as "Class Z Shares" (the "Shares") of the Fund; and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the payment of such distribution expenses by the Fund
will benefit the Trust and the Shareholders and desire to adopt a plan of
distribution pursuant to Rule 12b-1 under the 1940 Act with respect to Shares of
the Fund; and
WHEREAS, the Trust desires to compensate the Distributor or other parties
for providing the shareholder services described herein to Shareholders;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this distribution
and shareholder services plan (the "Plan") on the following terms and
conditions:
SECTION 1. The Trust has adopted this Plan to enable the Trust to directly
or indirectly bear expenses relating to the distribution of the Shares of the
Trust and for providing shareholder services. The Distributor is authorized,
pursuant to this Plan, to accept payments made to it and to make or direct
payments on behalf of the Fund to any shareholder servicing agent with which it
has entered into a shareholder servicing agreement or to any participating
broker/dealer with which it has entered into a broker agreement.
SECTION 2. The Fund shall pay to the Distributor compensation for
distribution of the Shares at the annual rate not to exceed 0.25% of the average
daily net assets of the Shares of the Fund. The amount of such compensation
shall be calculated and accrued daily and paid monthly or at such other
intervals as the Board of Trustees and the Distributor shall mutually agree.
Such amount may be spent by the Distributor on any activities or expenses
primarily intended to result in the sale of Shares, including, but not limited
to: compensation to and expenses, including overhead and telephone expenses, of
employees of the Distributor who engage in or support distribution of the
Shares; printing of prospectuses and reports for other than existing
stockholders; preparation, printing and distribution of sales literature and
advertising materials; and compensation to broker/dealers who sell Shares. The
Distributor may negotiate with any such broker/dealer the services to be
provided by the broker/dealer to stockholders in connection with the sale of
Shares, and all or any portion of the compensation paid to the Distributor under
this section may be reallocated by the Distributor to broker/dealers who sell
Shares.
SECTION 3. Of the total compensation authorized above, the Fund may pay
for shareholder services in an amount up to 0.25% of the average daily net
assets of the Shares which amount will reduce the aggregate Rule 12b-1
compensation received by the Distributor hereunder by such amount. Shareholder
services may be performed by the Distributor or its affiliates, or the
Distributor or its affiliates may enter into agreements with broker-dealers or
other financial institutions, including fiduciaries and administrators of
employee benefit plans, for the performance of such services. Shareholder
services may include, but are not limited to, the following services: (i)
establishing and maintaining customer accounts and records; (ii) aggregating and
processing purchase and redemption requests from customers and placing net
purchase and redemption orders with the Distributor; (iii) automatically
investing customer account cash balances; (iv) providing periodic statements to
their customers; (v) arranging for bank wires; (vi) answering routine customer
inquiries concerning their investments in the shares offered in connection with
this Plan and related distribution agreement; (vii) assisting customers in
changing dividend options, account designations and addresses; (viii) performing
sub-accounting functions; (ix) processing dividend payments from the Fund on
behalf of customers; (x) forwarding certain shareholder communications from the
Fund (such as proxies, shareholder reports and dividend, distribution and tax
notices) to customers; and (xi) providing such other similar services as may be
reasonably requested to the extent they are permitted to do so under applicable
statutes, rules and regulations. In addition, the Distributor shall perform or
supervise the performance by others of other shareholder services in connection
with the operations of the Shares, as agreed from time to time.
13
SECTION 4. This Plan shall not take effect with respect to the Fund until
it has been approved (a) by a vote of at least a majority of the outstanding
voting securities of the Shares of the Fund, if proposed to take effect after
the public offering of the Fund's Shares; and (b) together with any related
agreements, by votes of the majority of both (i) the Trustees of the Trust and
(ii) the Qualified Trustees (as defined in Section 10 herein), cast in person at
a Board of Trustees meeting called for the purpose of voting on this Plan or
such agreement.
SECTION 5. This Plan shall continue in effect for a term of one year.
Thereafter, this Plan shall continue in for so long as its continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 4 herein for the approval of this Plan.
SECTION 6. The Distributor shall provide to the Board of Trustees of the
Trust and the Board of Trustees shall review, at least quarterly, a written
report of the amounts expended pursuant to this Plan and the purposes for which
such expenditures were made, including commissions, advertising, printing,
interest, carrying charges and allocated overhead expenses.
SECTION 7. This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of the outstanding
voting securities of the Shares of the Fund.
SECTION 8. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the vote of a majority of the Qualified Trustees or by the
vote of a majority of the outstanding voting securities of the Shares of the
Fund, on not more than 60 days written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the amount
of distribution expenses permitted pursuant to Section 2 hereof without the
approval of Shareholders holding a majority of the outstanding voting securities
of the Shares of the Fund, and all material amendments to this Plan shall be
approved in the manner provided in Part (b) of Section 4 herein for the approval
of this Plan.
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees" shall
mean those Trustees of the Trust who are not interested persons of the Trust
within the meaning of Section 2(a)(19) of the 1940 Act, and have no direct or
indirect financial interest in the operation of this Plan or any agreements
related to it, and (b) the terms "assignment" and "interested person" shall have
the respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
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SECTION 11. While this Plan is in effect, Board of Trustees of the Trust
shall satisfy the fund governance standards as defined in Rule 0-1(a)(7) under
the 1940 Act.
SECTION 12. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to Section 6 hereof for a period of not
less than six years from the date of this Plan, such agreements or such reports,
as the case may be, the first two years in an easily accessible place.
TSF-1596-1104
15
PROXY TABULATOR EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
P.O. BOX 9112
FARMINGDALE, NY 11735 PLEASE SIGN, DATE AND RETURN YOUR VOTING
INSTRUCTIONS TODAY!
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the
proxy card below at hand.
2) Go to website WWW.PROXYVOTE.COM
3) Follow the instructions provided on
the website.
TO VOTE BY TELEPHONE
1) Read the Proxy Statement and have the
proxy card below at hand.
2) Call 1-800-690-6903
3) Follow the instructions.
TO VOTE BY MAIL
1) Read the Proxy Statement.
2) Check the appropriate boxes on the
proxy card below.
3) Sign and date the proxy card.
4) Return the proxy card in the envelope
provided.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
________________________________________________________________________________
TOUCHSTONE SMALL CAP VALUE FUND
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
VOTE THIS PROXY CARD TODAY!
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE FOLLOWING PROPOSAL:
FOR AGAINST ABSTAIN
1. To approve the adoption of a distribution plan |_| |_| |_|
pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended, for the Class Z
Shares of the Touchstone Small Cap Value Fund.
2. To transact such other business that may properly
come before the Meeting, or any adjournments thereof.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD. When signing
as attorney, executor, administrator, trustee, and guardian or as custodian for
a minor, please sign your name and give your full title as such. If signing on
behalf of a corporation please sign the full corporate name and your name and
indicates your title. If you are a partner signing for a partnership, please
sign the partnership name, your name and indicate your title. Joint owners
should each sign these instructions. Please sign, date and return.
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
__________________________________________ _____________________________
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
________________________________________________________________________________
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SPECIAL MEETING:
The Notice of Special Meeting and Proxy Statement are available at
www.proxyvote.com.
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________________________________________________________________________________
PROXY TOUCHSTONE SMALL CAP VALUE FUND PROXY
SPECIAL MEETING OF CLASS Z SHAREHOLDERS TO BE HELD ON
JUNE 3, 2011
The undersigned shareholder(s) of the Touchstone Small Cap Value Fund (the
"Fund") of the Touchstone Fund Group Trust (the "Trust") hereby appoints Jay Fit
ton and Brian Hirsch, or any one of them true and lawful attorneys with power of
substitution of each, to vote all shares which the undersigned is entitled to
vote, at the Special Meeting of Shareholders of the Fund to be held [OBJECT
OMITTED]on June 3, 2011, at the offices of the Trust, 303 Broadway, Suite 1100,
Cincinnati, Ohio 45202, at 10:00 a.m. Eastern Time, and At any adjournment
thereof as indicated on the reverse side. In its discretion, the Fund is
authorized to vote upon such other matters as may properly come before the
meeting.
RECEIPT OF THE NOTICE OF THE SPECIAL MEETING AND THE ACCOMPANYING PROXY
STATEMENT, AS APPLICABLE, IS HEREBY ACKNOWLEDGED. THE SHARES REPRESENTED HEREBY
WILL BE VOTED AS INDICATED OR FOR THE PROPOSAL IF NO CHOICE IS INDICATED.
IMPORTANT: PLEASE SIGN AND DATE ON THE REVERSE SIDE BEFORE MAILING
________________________________________________________________________________