Semi-Annual Report
June 30, 1999
o Emerging Growth
o International Equity
o Income Opportunity
o Value Plus
o Growth & Income
o Balanced
o Bond
o Standby Income
Touchstone
Family of Funds
<PAGE>
LETTER FROM THE PRESIDENT
Dear Fellow Touchstone Shareholder:
As evidenced by the performance reflected in this semi-annual report, a robust
domestic economy and healing economies abroad marked the first six months of
1999. Among the forces influencing the investment climate were modest price
inflation overall, strong corporate earnings, continued consumer confidence and
accelerating recoveries in many regions of the world, despite rising oil prices.
Expectations of an eventual boost in interest rates drove the price of the
bellwether 30-year Treasury bond downward and were fulfilled by a hike in the
federal funds rate of 1/4 of 1 percent on June 30.
Historical trends show that the performance of investment sectors and styles
runs in cycles. The cycles of different sector and style classes often move in
opposite directions and alternately lead and lag one another. When one is up,
the other is flat or down, and vice versa. We require that Touchstone managers
possess the experience to stay the course through these cycles and the expertise
to take advantage of the various opportunities presented over the course of
these cycles. In the first six months of 1999, some sectors and styles that
lagged in 1998 have exhibited a resurgence in performance and a subsequent
return to favor. Small capitalization stocks and value stocks have been among
the leading examples. The performance of a number of Touchstone's investment
options reflect that rebound. Please see the following pages for details.
Year 2000 Readiness
We have now passed the mid-point of 1999. We are confident that January 1, 2000,
will be like any other day when it comes to providing Touchstone shareholders
prompt and reliable service. We are taking every step to assure the readiness of
our computer systems for Year 2000. Even though we don't expect any problems, as
is our usual practice, we will have backup of all critical information on
December 31, 1999.
I'd like to take this opportunity to thank you for your investment in the
Touchstone Family of Funds and Variable Annuities.(1) We appreciate your
continued confidence and pledge every effort to continue to merit your trust.
Sincerely,
/s/Jill T. McGruder
Jill T. McGruder
President and Chief Executive Officer
Touchstone Family of Funds and Variable Annuities
(1) Touchstone Variable Annuities are underwritten by Western-Southern Life
Assurance Company, Cincinnati, Ohio. The Touchstone Family of Funds and Variable
Annuities are distributed by Touchstone Securities, Inc., member NASD and SIPC.
For a prospectus containing more information, including all fees and expenses,
call 800.669.2796. Please read the prospectus carefully before investing or
sending money.
<PAGE>
NOTES
2
<PAGE>
EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 95.6%
AUTOMOTIVE - 1.7%
3,100 Bandag, Class A $ 87,188
8,000 Exide 118,000
- ----------------------------------------------------------
205,188
- ----------------------------------------------------------
BANKING - 2.9%
3,000 Bank United, Class A 120,563
6,000 Dime Bancorp 120,750
5,100 Golden State Bancorp* 112,200
- ----------------------------------------------------------
353,513
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 2.1%
14,400 DiMon 74,700
5,200 Ralcorp Holdings* 83,525
14,200 Vlasic Foods International* 103,838
- ----------------------------------------------------------
262,063
- ----------------------------------------------------------
BUILDING MATERIALS - 4.0%
11,500 Dal-Tile International* 130,813
2,100 Martin Marietta Materials 123,900
5,100 Sawtek* 233,963
- ----------------------------------------------------------
488,676
- ----------------------------------------------------------
COMMERCIAL SERVICES - 13.2%
6,000 Administaff* 96,000
10,800 Applied Analytical Industries* 121,500
4,400 A.C. Nielson* 133,100
6,000 Career Education* 202,875
3,500 CDI* 119,219
5,000 DeVry* 111,875
7,000 Education Management* 145,250
10,000 FirstService* 152,500
4,500 Forrester Research* 112,500
7,400 Safety-Kleen* 134,125
10,100 Unova* 160,338
5,400 Wallace Computer Services 135,000
- ----------------------------------------------------------
1,624,282
- ----------------------------------------------------------
COMMUNICATIONS - 3.9%
8,000 AudioCodes* 216,000
2,100 Plantronics* 136,763
4,000 Powerwave Technologies* 129,000
- ----------------------------------------------------------
481,763
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 4.0%
8,500 CBT Group, ADR* 140,250
17,100 Natural MicroSystems* 163,519
1,800 pcOrder.com* 74,813
3,700 Policy Management System* 111,000
- ----------------------------------------------------------
489,582
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 1.8%
5,100 Gerber Scientific 112,519
10,800 Scitex* 108,000
- ----------------------------------------------------------
220,519
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.8%
9,100 Magnetek* 96,119
- ----------------------------------------------------------
ELECTRONICS - 14.5%
7,000 Aeroflex* 138,250
1,500 Commscope* 46,125
3,100 Dionex* 125,550
5,000 Galileo Technology* 226,563
Value
Shares (Note 1)
ELECTRONICS - CONTINUED
9,600 GP Strategies* $ 84,000
6,400 hi/fn* 487,200
9,100 MMC Networks* 407,216
12,900 Sipex* 264,450
- ----------------------------------------------------------
1,779,354
- ----------------------------------------------------------
ENTERTAINMENT & LEISURE - 3.0%
7,000 Cinar Films, Class B* 171,500
2,900 SFX Entertainment, Class A* 193,031
- ----------------------------------------------------------
364,531
- ----------------------------------------------------------
FOOD RETAILERS - 0.9%
7,000 Pantry (The)* 112,875
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 2.3%
5,000 Syncor International* 180,000
6,800 Total Renal Care Holdings* 105,825
- ----------------------------------------------------------
285,825
- ----------------------------------------------------------
HEAVY CONSTRUCTION - 1.6%
13,600 Foster Wheeler 192,100
- ----------------------------------------------------------
HEAVY MACHINERY - 1.7%
8,900 Helix Technology 213,044
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 0.7%
2,000 Herman Miller 42,000
2,000 LA-Z-Boy Chair 46,000
- ----------------------------------------------------------
88,000
- ----------------------------------------------------------
HOUSEHOLD PRODUCTS - 0.8%
2,600 Snap-on 94,088
- ----------------------------------------------------------
INSURANCE - 2.4%
6,300 HCC Insurance Holdings 142,931
3,600 HSB Group 148,275
- ----------------------------------------------------------
291,206
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 8.1%
6,000 American Tower Systems, Class A* 144,000
7,500 Capstar Broadcasting, Class A* 205,313
3,800 Central Newspapers, Class A 142,975
10,200 Hollinger International 121,125
13,500 Information Holdings* 264,938
3,600 Lee Enterprises 109,800
- ----------------------------------------------------------
988,151
- ----------------------------------------------------------
MEDICAL SUPPLIES - 6.5%
9,000 Arthocare* 184,500
2,900 EG&G 103,313
5,500 Novoste* 115,500
5,000 OEC Medical Systems* 122,500
3,900 Roper Industries 124,800
3,000 Xomed Surgical Products* 146,063
- ----------------------------------------------------------
796,676
- ----------------------------------------------------------
METALS - 1.6%
3,200 Harsco 102,400
4,100 Ryerson Tull 92,506
- ----------------------------------------------------------
194,906
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS CONTINUED
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
OIL & GAS - 3.1%
3,700 Equitable Resources $ 139,675
5,100 Helmerich & Payne 121,444
5,100 Nabors Industries* 124,631
- ----------------------------------------------------------
385,750
- ----------------------------------------------------------
PHARMACEUTICALS - 5.1%
6,200 Albany Molecular Research* 184,450
10,300 Anesta* 210,506
3,500 King Pharmaceuticals* 90,563
4,000 Millennium Pharmaceuticals* 144,000
- ----------------------------------------------------------
629,519
- ----------------------------------------------------------
REAL ESTATE - 0.8%
4,000 Prentiss Properties Trust, REIT 94,000
- ----------------------------------------------------------
RETAILERS - 1.1%
5,600 Enesco Group 129,500
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 2.2%
3,000 Frontier 177,000
3,000 Qwest Communications
International* 99,188
- ----------------------------------------------------------
276,188
- ----------------------------------------------------------
TEXTILES, CLOTHING & FABRICS - 1.8%
4,532 Albany International* 94,039
8,700 Stride Rite 89,719
2,000 Unifi* 42,500
- ----------------------------------------------------------
226,258
- ----------------------------------------------------------
Value
Shares (Note 1)
TRANSPORTATION - 3.0%
12,100 Fritz Companies* $ 130,075
16,000 Halter Marine Group* 106,000
7,300 Yellow* 129,575
- ----------------------------------------------------------
365,650
TOTAL COMMON STOCKS
(COST $10,147,814) 11,729,326
- ----------------------------------------------------------
WARRANTS - 0.0%
BANKING - 0.0%
2,200 Golden State Bancorp* 2,888
- ----------------------------------------------------------
TOTAL WARRANTS (COST $9,438) 2,888
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 95.6%
(COST $10,157,252)(A) 11,732,214
CASH AND OTHER ASSETS
NET OF LIABILITIES - 4.4% 542,599
NET ASSETS - 100.0% $12,274,813
- ----------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$10,157,252, resulting in gross unrealized appreciation and depreciation of
$2,424,789 and $849,827, respectively, and net unrealized appreciation of
$1,574,962.
ADR - American Depository Receipt
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 95.2%
AUSTRALIA - 2.0%
7,110 Broken Hill Proprietary $ 82,363
2,496 Lend Lease 34,272
2,800 National Australia Bank 46,337
5,958 Publishing & Broadcasting 39,321
6,675 Southcorp 26,957
- ----------------------------------------------------------
229,250
- ----------------------------------------------------------
BRAZIL - 0.6%
1,400 Electrobras, ADR* 14,095
1,200 Petroleo Brasileiro, ADR 18,478
384 Telecomunicacoes Brasileiras
(Telebras), PFD Block, ADR 34,632
- ----------------------------------------------------------
67,205
- ----------------------------------------------------------
CHILE - 0.1%
300 Compania de Telecomunicaciones
de Chile, ADR 7,425
- ----------------------------------------------------------
CHINA - 0.1%
525 China Steel, 144A, ADR* 7,932
- ----------------------------------------------------------
FINLAND - 2.8%
2,545 Nokia Oyj 223,237
971 Sonera Group 21,243
2,830 UPM-Kymmene 81,188
- ----------------------------------------------------------
325,668
- ----------------------------------------------------------
FRANCE - 9.4%
573 Accor 143,983
1,084 AXA 132,334
658 Cap Gemini 103,483
1,035 Carrefour Supermarche* 152,200
587 Compagnie de Saint Gobain 93,589
2,080 Compagnie Generale des
Etablissements Michelin, Class B 85,150
547 Louis Vuitton Moet Hennessy 160,255
1,156 Total Fina, B 149,236
991 Valeo 81,813
- ----------------------------------------------------------
1,102,043
- ----------------------------------------------------------
GERMANY - 6.4%
251 Allianz Holdings 69,676
2,040 BASF 90,207
1,548 DaimlerChrysler 134,187
1,695 Mannesmann 253,099
2,149 Preussag* 115,540
1,049 Siemens 80,972
- ----------------------------------------------------------
743,681
- ----------------------------------------------------------
GREAT BRITAIN - 23.7%
4,254 Abbey National 79,848
4,595 Amvescap 40,880
184 Anglo American* 8,595
9,717 Bank of Scotland 128,638
13,560 British Petroleum 242,983
11,347 British Telecommunications 190,560
6,354 Cable & Wireless
Communications* 61,085
10,872 Cable & Wireless 138,472
5,225 CGU 74,276
2,471 COLT Telecom Group* 50,626
4,026 Compass Group 39,910
Value
Shares (Note 1)
GREAT BRITAIN - CONTINUED
1,358 Energis* $ 32,381
15,620 General Electric 159,273
6,485 Glaxo Wellcome 180,185
9,482 Kingfisher 109,089
333 Liberty International* 2,206
10,527 Lloyds TSB Group 143,682
7,356 Nycomed Amersham 51,343
6,633 Orange* 98,451
5,776 Peninsular and Oriental
Steam Navigation 86,706
4,346 SEMA Group 41,901
25,306 Shell Transport & Trading 189,740
13,584 SmithKline Beecham 176,512
1,702 South African Breweries 14,773
4,064 Unilever 36,155
12,571 Vodafone Group 248,837
17,033 WPP Group 143,615
- ----------------------------------------------------------
2,770,722
- ----------------------------------------------------------
GREECE - 0.3%
2,520 Hellenic Telecommunications
Organization, ADR* 27,878
1,104 National Bank of Greece, GDR* 14,186
- ----------------------------------------------------------
42,064
- ----------------------------------------------------------
HONG KONG - 0.9%
2,000 Cheung Kong Holdings 17,787
7,600 China Telecom* 21,109
2,057 Hang Seng Bank 23,000
2,700 Henderson Land Development 15,521
1,000 Hutchison Whampoa 9,054
4,000 Swire Pacific, Class A 19,797
- ----------------------------------------------------------
106,268
- ----------------------------------------------------------
IRELAND - 1.0%
8,790 Allied Irish Banks 115,930
1 Bank of Ireland 10
- ----------------------------------------------------------
115,940
- ----------------------------------------------------------
ISRAEL - 0.1%
250 ECI Telecommunications 8,297
- ----------------------------------------------------------
ITALY - 3.5%
3,848 Assicurazione Generali 133,583
6,821 Istituto Bancario San Paolo
di Torino 93,097
59,290 Seat Pagine Gialle 80,763
10,203 Telecom Italia 105,869
- ----------------------------------------------------------
413,312
- ----------------------------------------------------------
JAPAN - 25.2%
800 Acom 69,085
900 Aiwa, First Section 29,750
5,600 Bank of Tokyo 79,736
100 Bellsystem 24, Second Section 40,864
2,000 Bridgestone 60,491
1,000 Canon 28,758
4,000 Daiwa House Industry,
First Section 42,079
200 Don Quijote, Second Section 50,326
1,100 Familymart 50,450
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS CONTINUED
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
JAPAN - CONTINUED
700 Fanuc, First Section $ 37,600
7,000 Fuji Heavy Industries 54,029
520 Fuji Soft ABC, First Section 30,940
2,000 Fujitsu 40,245
1,000 Heiwa, First Section 18,015
100 Hikari Tsushin 30,907
1,000 Hoya, First Section 56,442
1,400 ITO Yokado 93,711
100 Kadokawa Shoten Publishing,
Second Section 20,412
2,000 Kao 56,194
500 Konami 20,659
400 Mabuchi Motor, First Section 37,187
2,000 Matsushita Electric 38,840
33 Merrill Lynch (Honda Motor), CPS 35,822
3,000 Minebea 33,468
8,900 Mitsui Chemicals 57,367
4,000 Mitsui O.S.K. Lines, First Section 8,594
30 Morgan Stanley Dean Witter
(Canon Inc), CPS* 35,023
25 Morgan Stanley Dean Witter
(Sony Corp), CPS* 45,609
3,000 NEC 37,311
623 Nichiei, First Section 54,572
100 NIDEC, First Section 14,999
900 Nintendo 125,320
9,000 Nippon Express 53,921
40 Nippon Telegraph & Telephone 233,039
5,000 Nomura Securities 58,549
7 NTT Data, First Section 55,648
50 NTT Mobile Communication
Network, First Section 67,763
300 Orix, First Section 26,775
300 Rohm Company 46,980
100 Ryohin Keikaku, Second Section 25,163
400 Sankyo, First Section 19,139
4,000 Sanwa Bank (The) 39,369
4,000 Sekisui House 43,170
1,000 Softbank, First Section 202,545
900 Sony 97,058
4,000 Sumitomo Bank 49,616
8,000 Sumitomo Chemical, First Section 36,691
15,000 Sumitomo Realty & Development 56,276
1,000 Sumitomo Rubber Industries,
First Section 7,074
1,000 Takeda Chemical Industries 46,360
1,500 TDK 137,220
300 Tokyo Seimitsu, First Section 19,114
6,000 Toshiba 42,790
4,000 Toyota Motor 126,601
200 WORLD, Second Section 14,858
1,000 Yakult Honsha, First Section 9,131
- ----------------------------------------------------------
2,949,655
- ----------------------------------------------------------
Value
Shares (Note 1)
MEXICO - 0.9%
2,000 Cemex SA de CV, Class B, ADR $ 19,772
1,100 Cifra, ADR* 21,097
850 Telefonos de Mexico, Class L, ADR 68,691
- ----------------------------------------------------------
109,560
- ----------------------------------------------------------
NETHERLANDS - 7.0%
685 AEGON 49,729
1,707 Equant* 157,482
2,136 Fortis 66,017
1,233 Ing Groep 66,801
1,298 Koninklijke Numico 46,011
1,289 Koninklijke (Royal) Philips
Electronics 127,224
3,214 STMicroelectronics 215,485
518 STMicroelectronics, ADR 35,936
1,297 Verenigde Nederlandse 51,865
- ----------------------------------------------------------
816,550
- ----------------------------------------------------------
SINGAPORE - 0.7%
3,720 City Developments 23,824
12,000 DBS Land 23,972
4,100 Natsteel Electronics 17,947
1,500 Singapore Airlines 14,277
- ----------------------------------------------------------
80,020
- ----------------------------------------------------------
SOUTH AFRICA - 0.1%
715 Liberty Life Association of Africa 9,155
- ----------------------------------------------------------
SOUTH KOREA - 1.3%
3,200 Korea Electric Power, ADR 65,600
1,200 Korea Telecom, ADR* 48,000
657 Pohang Iron & Steel 22,092
74 Samsung Electronics, GDR* 3,981
1,140 SK Telecom, ADR 19,380
- ----------------------------------------------------------
159,053
- ----------------------------------------------------------
SPAIN - 0.9%
10,060 Banco Santander Central
Hispano* 104,852
- ----------------------------------------------------------
SWEDEN - 2.6%
5,109 Electrolux, Class B 107,216
2,550 Ericsson 81,923
5,951 Skandia Forsakrings 111,555
- ----------------------------------------------------------
300,694
- ----------------------------------------------------------
SWITZERLAND - 5.1%
794 ABB* 74,901
65 Novartis 95,010
22 Roche Holding 113,187
142 Swisscom 53,490
471 Union Bank of Switzerland 140,724
203 Zurich Allied 115,552
- ----------------------------------------------------------
592,864
- ----------------------------------------------------------
TAIWAN - 0.5%
1,760 Taiwan Semiconductor
Manufacturing, ADR* 59,840
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $10,025,089) 11,122,050
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INTERNATIONAL EQUITY FUND
Value
Shares (Note 1)
INVESTMENT TRUST - 0.2%
TAIWAN - 0.2%
190 Morgan Stanley Taiwan OPALS,
Series B, 144A $ 25,912
- ----------------------------------------------------------
TOTAL INVESTMENT TRUST
(COST $23,708) 25,912
- ----------------------------------------------------------
PREFERRED STOCK - 0.4%
GERMANY - 0.4%
102 SAP 40,788
- ----------------------------------------------------------
TOTAL PREFERRED STOCK
(COST $39,044) 40,788
- ----------------------------------------------------------
RIGHTS - 0.1%
FRANCE - 0.1%
547 Louis Vuitton Moet Hennessy* 16,003
- ----------------------------------------------------------
TOTAL RIGHTS
(COST $0) 16,003
- ----------------------------------------------------------
Value
(Note 1)
TOTAL INVESTMENTS AT VALUE - 95.9%
(COST $10,087,841)(A) $11,204,753
CASH AND OTHER ASSETS
NET OF LIABILITIES - 4.1% 480,186
- ----------------------------------------------------------
NET ASSETS - 100.0% $11,684,939
- ----------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$10,087,841, resulting in gross unrealized appreciation and depreciation of
$1,509,374 and $392,462, respectively, and net unrealized appreciation of
$1,116,912.
144A - Securities restricted for resale to Qualified Institutional Buyers
with registration rights.
ADR - American Depository Receipt
CPS - Currency Protected Security
GDR - Global Depository Receipt
OPALS - Optimised Portfolios As Listed Securities
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
INCOME OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - 71.9%
AUTOMOTIVE - 2.7%
$ 250,000 Sonic Automotive,
Series B 11.00% 08/01/08 $ 247,500
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 1.6%
200,000 Mastellone Hermanos,
Yankee-Dollar 11.75% 04/01/08 142,000
- ----------------------------------------------------------
CHEMICALS - 8.3%
250,000 Lyondell Chemical,
Series B, 144A 9.875% 05/01/07 255,625
250,000 Royster-Clark,
144A 10.25% 04/01/09 246,250
250,000 ZSC Specialty
Chemicals, 144A 11.00% 07/01/09 251,875
- ----------------------------------------------------------
753,750
- ----------------------------------------------------------
COMMERCIAL SERVICES - 2.0%
200,000 Dialog, Series A,
Yankee-Dollar 11.00% 11/15/07 181,000
- ----------------------------------------------------------
COMMUNICATIONS - 9.9%
250,000 Netia Holdings,
144A 13.125% 06/15/09 251,875
250,000 Northeast Optic
Network 12.75% 08/15/08 258,750
250,000 Orion Network 1.25% 01/15/07 223,750
400,000 Paging Network do
Brasil, Yankee-
Dollar (c) 13.50% 06/06/05 168,000
- ----------------------------------------------------------
902,375
- ----------------------------------------------------------
CONTAINERS & PACKAGING - 2.8%
250,000 Consolidated
Container, 144A 10.125% 07/15/09 253,750
- ----------------------------------------------------------
ELECTRIC UTILITIES - 2.8%
250,000 AES Corporation
(The) 9.50% 06/01/09 256,875
- ----------------------------------------------------------
ENTERTAINMENT & LEISURE - 4.2%
250,000 Bell Sports,
Series B 11.00% 08/15/08 248,750
250,000 TVN Entertainment,
144A(c) 14.00% 08/01/08 137,500
- ----------------------------------------------------------
386,250
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 2.8%
250,000 LifePoint Hospitals,
144A 10.75% 05/15/09 254,375
- ----------------------------------------------------------
HEAVY MACHINERY - 2.6%
250,000 Tokheim, 144A 11.375% 08/01/08 238,750
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 2.5%
300,000 Imperial Home
Decor Group,
Series B 11.00% 03/15/08 225,000
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
INDUSTRIAL - DIVERSIFIED - 14.1%
$ 250,000 Aqua Chem 11.25% 07/01/08 $ 175,000
250,000 Evenflo, Series B 11.75%08/15/06 252,500
500,000 FSW International,
Yankee-Dollar#+ 12.50% 11/01/06 125,000
250,000 Generac Portable
Products, 144A 11.25% 07/01/06 273,125
250,000 Pen-Tab
Industries 10.875% 02/01/07 212,500
250,000 Pentacon,
Series B 12.25% 04/01/09 246,250
- ----------------------------------------------------------
1,284,375
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 1.7%
200,000 Source Media 12.00% 11/01/04 160,000
- ----------------------------------------------------------
METALS - 2.2%
500,000 Nippon Denro
Ispat, Euro-Dollar3.00% 04/01/01 130,000
500,000 NTS Steel Group,
Euro-Dollar#+ 4.00% 12/16/08 75,000
- ----------------------------------------------------------
205,000
- ----------------------------------------------------------
OIL & GAS - 4.6%
250,000 Panaco 10.625% 10/01/04 162,500
250,000 Western Gas
Resources, 144A 10.00% 06/15/09 254,688
- ----------------------------------------------------------
417,188
- ----------------------------------------------------------
REAL ESTATE - 2.7%
250,000 LNR Property 10.50% 01/15/09 250,000
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 2.8%
250,000 NEXTLINK
Communications 10.75% 06/01/09 256,250
- ----------------------------------------------------------
TRANSPORTATION - 1.6%
200,000 Stena Line 10.625% 06/01/08 151,000
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $8,041,344) 6,565,438
- ----------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 24.8%
ARGENTINA - 2.2%
232,500 Republic
of Argentina(b) 5.938% 03/31/05 199,136
- ----------------------------------------------------------
BRAZIL - 4.7%
300,000 Republic of
Brazil, 11.625% 04/15/04 278,250
250,000 Republic of Brazil,
Brady Bond(b) 5.875% 04/15/24 154,688
- ----------------------------------------------------------
432,938
- ----------------------------------------------------------
BULGARIA - 2.6%
350,000 Government of
Bulgaria, Brady
Bond, IAB(b) 5.875% 07/28/11 237,125
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
INCOME OPPORTUNITY FUND
Principal Interest Maturity Value
Amount Rate Date (Note 1)
SOVEREIGN GOVERNMENT OBLIGATIONS - CONTINUED
COLOMBIA - 2.2%
$ 250,000 Republic of
Colombia 9.75% 04/23/09 $ 205,000
- ----------------------------------------------------------
MEXICO - 5.5%
500,000 United Mexican
States 10.375% 02/17/09 501,874
- ----------------------------------------------------------
PHILIPPINE ISLANDS - 2.1%
200,000 Republic of
Philippines 9.875% 01/15/19 195,750
- ----------------------------------------------------------
RUSSIA - 1.1%
200,000 Russian
Federation 8.75% 07/24/05 99,250
- ----------------------------------------------------------
TURKEY - 2.7%
250,000 Republic of
Turkey 12.375% 06/15/09 242,813
- ----------------------------------------------------------
VENEZUELA - 1.7%
202,380 Republic of
Venezuela, Series
DL, Brady Bond,
DCB(b) 6.313% 12/18/07 153,809
- ----------------------------------------------------------
TOTAL SOVEREIGN GOVERNMENT
OBLIGATIONS (COST $2,269,286) 2,267,695
- ----------------------------------------------------------
Value
Units (Note 1)
WARRANTS - 0.0%
250 Central Bank
of Nigeria* --
3,375 Conecel Holdings* --
200 Primus
Telecommunications* 4,000
- ----------------------------------------------------------
TOTAL WARRANTS (COST $0) 4,000
- ----------------------------------------------------------
Value
(Note 1)
TOTAL INVESTMENTS AT VALUE - 96.7%
(COST $10,310,631)(A) $ 8,837,133
CASH AND OTHER ASSETS
NET OF LIABILITIES - 3.3% 300,109
- ----------------------------------------------------------
NET ASSETS - 100.0% $ 9,137,242
- ----------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
# Security currently in default of interest payment. The Portfolio is not
accruing stated interest.
+ Restricted and Board valued security (Note 5).
(a) The aggregate identified cost for federal income tax purposes is
$10,310,630, resulting in gross unrealized appreciation and depreciation of
$151,654 and $1,625,152 respectively, and net unrealized depreciation of
$1,473,498.
(b) Interest rate shown reflects current rate on instrument with variable or
floating rates. (c) Security issued with detachable warrants. The current value
of each warrant is zero. 144A - Securities restricted for resale to Qualified
Institutional
Buyers with registration rights.
Brady Bond - U.S. dollar denominated bonds of developing countries that
were exchanged, in a restructuring, for commercial bank loans in
default. The bonds are collateralized by U.S. Treasury zero-coupon
bonds to ensure principal.
DCB - Debt Conversion Bond
Euro-Dollar - Bonds issued offshore that pay interest and principal in
U.S. dollars.
IAB - Interest Arrears Bond
Yankee-Dollar - U.S. dollar denominated bonds issued by non-U.S.
companies in the U.S.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
VALUE PLUS FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 98.2%
AEROSPACE & DEFENSE - 1.3%
6,600 Allied Signal $ 415,800
- ----------------------------------------------------------
AUTOMOTIVE - 2.4%
13,000 Magna International, Class A 737,750
- ----------------------------------------------------------
BANKING - 5.5%
10,206 Bank One 607,895
18,000 First American 748,125
16,500 North Fork Bancorporation 351,656
- ----------------------------------------------------------
1,707,676
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 4.1%
21,200 Pepsico 820,175
16,000 Sysco 477,000
- ----------------------------------------------------------
1,297,175
- ----------------------------------------------------------
CHEMICALS - 1.2%
5,700 Du Pont (E.I.) De Nemours 389,381
- ----------------------------------------------------------
COMMERCIAL SERVICES - 1.6%
34,400 Stewart Enterprises 500,950
- ----------------------------------------------------------
COMMUNICATIONS - 3.8%
13,700 Nortel Networks 1,189,329
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 2.8%
16,400 Ceridian* 536,075
7,200 First Data 352,350
- ----------------------------------------------------------
888,425
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 2.8%
12,800 Sun Microsystems* 881,600
- ----------------------------------------------------------
ELECTRIC UTILITIES - 1.6%
12,100 CMS Energy 506,688
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.0%
6,600 Thomas & Betts 311,850
- ----------------------------------------------------------
ELECTRONICS - 4.7%
8,200 Intel 487,900
11,300 Micron Technology* 455,531
9,400 Xilinx* 538,150
- ----------------------------------------------------------
1,481,581
- ----------------------------------------------------------
FINANCIAL SERVICES - 7.1%
14,550 Citigroup 691,125
9,100 Federal National Mortgage
Association 622,213
3,600 Morgan Stanley Dean Witter 369,000
11,500 SLM Holding 526,844
- ----------------------------------------------------------
2,209,182
- ----------------------------------------------------------
FOOD RETAILERS - 2.3%
13,860 Albertson's 714,656
- ----------------------------------------------------------
Value
Shares (Note 1)
FOREST PRODUCTS & PAPER - 5.0%
12,900 Kimberly-Clark $ 735,300
13,900 Mead 580,325
10,100 Tenneco 241,138
- ----------------------------------------------------------
1,556,763
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 2.7%
17,900 HCR Manor Care* 432,956
26,600 Healthsouth* 397,338
- ----------------------------------------------------------
830,294
- ----------------------------------------------------------
HEAVY MACHINERY - 1.8%
7,800 Applied Materials* 576,225
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 3.1%
5,700 General Electric 644,100
6,900 Newell Rubbermaid 320,850
- ----------------------------------------------------------
964,950
- ----------------------------------------------------------
INSURANCE - 6.1%
5,000 Aetna 447,188
9,300 Equitable Companies 623,100
5,000 Ohio Casualty 180,625
14,800 Reliastar Financial 647,500
- ----------------------------------------------------------
1,898,413
- ----------------------------------------------------------
MEDICAL SUPPLIES - 1.6%
16,300 Becton Dickinson & Company 489,000
- ----------------------------------------------------------
OFFICE EQUIPMENT - 3.1%
16,500 Xerox 974,531
- ----------------------------------------------------------
OIL & GAS - 9.0%
6,400 Chevron 609,200
11,800 Conoco, Class A 328,925
8,300 Mobil 821,700
5,500 Schlumberger 350,281
16,500 Williams Companies 702,281
- ----------------------------------------------------------
2,812,387
- ----------------------------------------------------------
PHARMACEUTICALS - 5.4%
6,300 Abbott Laboratories 286,650
12,800 Amgen* 779,200
8,200 Merck 606,800
- ----------------------------------------------------------
1,672,650
- ----------------------------------------------------------
RETAILERS - 4.0%
10,800 Consolidated Stores* 291,600
8,500 Federated Department Stores* 449,969
22,600 Office Depot* 498,613
- ----------------------------------------------------------
1,240,182
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 11.5%
9,600 Alltel 686,400
8,000 Bell Atlantic 523,000
17,400 Frontier 1,026,600
7,200 MCI Worldcom* 619,650
13,000 SBC Communications 754,000
- ----------------------------------------------------------
3,609,650
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
VALUE PLUS FUND
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
TRANSPORTATION - 2.7%
5,500 Trinity Industries $ 184,250
8,500 US Freightways 393,656
13,700 Wisconsin Central Transport* 258,588
- ----------------------------------------------------------
836,494
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $26,354,132) 30,693,582
- ----------------------------------------------------------
Value
(Note 1)
TOTAL INVESTMENTS AT VALUE - 98.2%
(COST $26,354,132)(A) $30,693,582
CASH AND OTHER ASSETS
NET OF LIABILITIES - 1.8% 576,123
- ----------------------------------------------------------
NET ASSETS - 100.0% $31,269,705
- ----------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$26,354,132, resulting in gross unrealized appreciation and depreciation of
$5,924,896 and $1,585,446, respectively, and net unrealized appreciation of
$4,339,450.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 97.0%
AEROSPACE & DEFENSE - 3.8%
19,900 Lockheed Martin $ 741,275
5,500 Northrop Grumman 364,719
7,200 Rockwell International 437,400
- ----------------------------------------------------------
1,543,394
- ----------------------------------------------------------
AUTOMOTIVE - 3.5%
16,000 Ford Motor 903,000
8,500 Meritor Automotive 216,750
5,900 Paccar 314,913
- ----------------------------------------------------------
1,434,663
- ----------------------------------------------------------
BANKING - 8.9%
14,500 Bank of America 1,063,031
7,909 Bank One 471,080
9,500 Chase Manhattan 822,938
8,962 First Union 421,214
11,600 Fleet Financial Group 514,750
8,900 US Bancorp 302,600
- ----------------------------------------------------------
3,595,613
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 3.3%
10,300 Heinz (H. J.) 516,288
10,200 Pepsico 394,613
10,100 Philip Morris 405,894
- ----------------------------------------------------------
1,316,795
- ----------------------------------------------------------
CHEMICALS - 5.3%
9,200 Akzo, ADR 389,850
4,000 Dow Chemical 507,500
9,700 Du Pont (E.I.) De Nemours 662,631
28,400 Lyondell Petro Chemical 585,750
- ----------------------------------------------------------
2,145,731
- ----------------------------------------------------------
COMMERCIAL SERVICES - 2.0%
23,200 Pacificorp 426,300
10,500 Unicom 404,906
- ----------------------------------------------------------
831,206
- ----------------------------------------------------------
COSMETICS & PERSONAL CARE - 3.9%
17,100 Avon Products 949,050
6,400 Colgate-Palmolive 632,000
- ----------------------------------------------------------
1,581,050
- ----------------------------------------------------------
ELECTRIC UTILITIES - 0.5%
6,700 Cinergy 214,400
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.7%
4,500 Emerson Electric 282,938
- ----------------------------------------------------------
FINANCIAL SERVICES - 2.3%
10,400 Federal National Mortgage
Association 711,100
1,500 J.P. Morgan 210,750
- ----------------------------------------------------------
921,850
- ----------------------------------------------------------
FOOD RETAILERS - 0.2%
1,263 Albertson's 65,123
- ----------------------------------------------------------
Value
Shares (Note 1)
FOREST PRODUCTS & PAPER - 4.6%
12,300 Georgia-Pacific $ 582,713
5,600 Georgia-Pacific (Timber Group) 141,400
5,600 Temple-Inland 382,200
11,200 Weyerhauser 770,000
- ----------------------------------------------------------
1,876,313
- ----------------------------------------------------------
HEAVY MACHINERY - 1.8%
3,400 Caterpillar 204,000
11,700 Parker Hannifin 535,275
- ----------------------------------------------------------
739,275
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 1.1%
3,900 General Electric 440,700
- ----------------------------------------------------------
HOUSEHOLD PRODUCTS - 4.8%
27,500 Corning 1,928,432
- ----------------------------------------------------------
INSURANCE - 4.2%
4,600 Lincoln National 240,638
2,900 Marsh & McLennan Companies 218,950
15,600 St. Paul Companies (The) 496,275
13,070 XL Capital, Class A 738,455
- ----------------------------------------------------------
1,694,318
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 0.5%
3,800 McGraw-Hill Companies (The) 204,963
- ----------------------------------------------------------
METALS - 2.4%
22,300 Allegheny Teledyne 504,538
21,100 Oregon Steel Mills 280,894
2,000 Phelps Dodge 123,875
1,100 Reynolds Metals 64,900
- ----------------------------------------------------------
974,207
- ----------------------------------------------------------
OFFICE EQUIPMENT - 3.7%
25,100 Xerox 1,482,469
- ----------------------------------------------------------
OIL & GAS - 9.4%
4,314 BP Amoco, ADR 468,069
14,600 Conoco, Class A 406,975
6,600 Elf Aquitaine, ADR 485,513
4,500 Mobil 445,500
7,000 Royal Dutch Petroleum 421,750
9,600 Texaco 600,000
7,100 Total Fina, ADR* 457,506
12,500 Williams Companies (The) 532,031
- ----------------------------------------------------------
3,817,344
- ----------------------------------------------------------
PHARMACEUTICALS - 6.3%
20,700 American Home Products 1,190,250
7,900 Bristol-Myers Squibb 556,456
6,400 Glaxo Wellcome, ADR 362,400
6,900 Smithkline Beecham, ADR 455,831
- ----------------------------------------------------------
2,564,937
- ----------------------------------------------------------
REAL ESTATE - 0.7%
7,500 Boston Properties, REIT 269,063
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
GROWTH & INCOME FUND
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
RETAILERS - 1.5%
24,400 Rite Aid $ 600,850
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 17.5%
9,600 Alltel 686,400
5,800 Ameritech 426,300
21,500 Bell Atlantic 1,405,563
19,400 Bellsouth 909,375
12,900 Frontier 761,100
12,700 GTE 962,025
14,500 SBC Communications 841,000
14,600 Sprint 771,063
13,400 Telesp Participacoes, ADR 306,525
- ----------------------------------------------------------
7,069,351
- ----------------------------------------------------------
TRANSPORTATION - 4.1%
5,600 Canadian National Railway 375,200
11,500 Canadian Pacific 273,844
16,500 CSX 747,656
9,000 Norfolk Southern 271,125
- ----------------------------------------------------------
1,667,825
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $33,818,324) 39,262,810
- ----------------------------------------------------------
Value
Shares (Note 1)
CONVERTIBLE PREFERRED STOCKS - 0.6%
CHEMICALS - 0.6%
5,900 Monsanto, ACES $ 236,738
- ----------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED
STOCKS (COST $244,330) 236,738
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 97.6%
(COST $34,062,654)(A) 39,499,548
CASH AND OTHER ASSETS
NET OF LIABILITIES - 2.4% 954,006
- ----------------------------------------------------------
NET ASSETS - 100.0% $40,453,554
- ----------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$34,062,654, resulting in gross unrealized appreciation and depreciation of
$6,542,577 and $1,105,684, respectively, and net unrealized appreciation of
$5,436,893.
ACES - Adjustable Conversion-Rate Equity Security
ADR - American Depository Receipt
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
BALANCED FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 63.0%
ADVERTISING - 3.0%
700 Lamar Advertising* $ 28,656
1,500 WPP Group 128,625
1,500 Young & Rubicam 68,156
- ----------------------------------------------------------
225,437
- ----------------------------------------------------------
AEROSPACE & DEFENSE - 2.0%
2,100 Boeing 92,794
900 Rockwell International 54,675
- ----------------------------------------------------------
147,469
- ----------------------------------------------------------
AIRLINES - 1.2%
1,300 AMR* 88,725
- ----------------------------------------------------------
BANKING - 4.0%
1,200 BankBoston 61,350
1,800 Household International 85,275
3,500 Wells Fargo 149,625
- ----------------------------------------------------------
296,250
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 3.0%
2,255 Diageo, ADR 96,965
3,100 McDonald's 128,069
- ----------------------------------------------------------
225,034
- ----------------------------------------------------------
CHEMICALS - 2.7%
1,200 Du Pont (E.I.) De Nemours 81,975
3,000 Monsanto 118,313
- ----------------------------------------------------------
200,288
- ----------------------------------------------------------
COMMERCIAL SERVICES - 1.4%
2,000 Waste Management 107,500
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 4.7%
7,600 Cadence Design Systems* 96,900
3,550 Computer Associates International 195,243
1,200 First Data 58,725
- ----------------------------------------------------------
350,868
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 2.1%
3,900 Compaq Computer 92,381
1,400 Jabil Circuit* 63,175
- ----------------------------------------------------------
155,556
ELECTRICAL EQUIPMENT - 1.2%
1,400 Emerson Electric 88,025
- ----------------------------------------------------------
ELECTRONICS - 4.4%
2,000 Arrow Electronics* 38,000
1,300 Avnet 60,450
1,000 Flextronics International* 55,500
700 Motorola 66,325
1,400 Oak Industries* 61,163
700 Raytheon, Class B 49,263
- ----------------------------------------------------------
330,701
- ----------------------------------------------------------
FINANCIAL SERVICES - 4.8%
3,675 Citigroup 174,563
2,100 Countrywide Credit 89,775
1,700 Federal Home Loan Mortgage
Corporation 98,600
- ----------------------------------------------------------
362,938
- ----------------------------------------------------------
Value
Shares (Note 1)
HEAVY MACHINERY - 2.3%
1,900 Caterpillar $ 114,000
1,700 Dover 59,500
- ----------------------------------------------------------
173,500
- ----------------------------------------------------------
INDUSTRIAL - DIVERSIFIED - 2.5%
900 Carlisle Companies 43,313
1,700 Minnesota Mining & Manufacturing 147,794
- ----------------------------------------------------------
191,107
- ----------------------------------------------------------
INSURANCE - 4.5%
2,000 Ace Limited 56,500
1,200 AFLAC 57,450
2,057 Conseco 62,610
1,800 Everest Reinsurance Holdings 58,725
1,000 PartnerRe 37,375
1,200 XL Capital, Class A 67,800
- ----------------------------------------------------------
340,460
- ----------------------------------------------------------
LODGING - 1.2%
35,400 Homestead Village* 86,288
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 3.6%
2,700 Chancellor Media* 148,838
1,700 Emmis Communications, Class A* 83,938
2,000 Gartner Group, Class A* 41,000
- ----------------------------------------------------------
273,776
- ----------------------------------------------------------
MEDICAL SUPPLIES - 1.1%
1,000 Becton Dickinson & Company 30,000
1,500 EG&G 53,438
- ----------------------------------------------------------
83,438
- ----------------------------------------------------------
METALS - 2.3%
1,100 Alcoa 68,063
2,000 Allegheny Teledyne 45,250
2,000 Crane 62,875
- ----------------------------------------------------------
176,188
- ----------------------------------------------------------
OIL & GAS - 0.6%
1,300 Anadarko Petroleum 47,856
- ----------------------------------------------------------
PHARMACEUTICALS - 2.0%
1,500 American Home Products 86,250
1,250 Teva Pharmaceutical Industries,
ADR 61,250
- ----------------------------------------------------------
147,500
- ----------------------------------------------------------
REAL ESTATE - 1.7%
3,200 Prologis Trust, REIT 64,800
4,400 Security Capital Group, Class B* 64,075
- ----------------------------------------------------------
128,875
- ----------------------------------------------------------
RETAILERS - 0.7%
1,300 May Department Stores 53,138
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 2.1%
700 MCI Worldcom* 60,375
1,800 Sprint 95,063
- ----------------------------------------------------------
155,438
- ----------------------------------------------------------
TEXTILES, CLOTHING & FABRICS - 0.4%
1,800 Shaw Industries* 29,700
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
BALANCED FUND
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
TRANSPORTATION - 3.5%
3,300 Air Express International $ 83,738
2,500 Canadian Pacific 59,531
1,700 Sabre Group Holdings* 116,875
- ----------------------------------------------------------
260,144
- ----------------------------------------------------------
TOTAL COMMON STOCKS (COST $4,506,524) 4,726,199
- ----------------------------------------------------------
PREFERRED STOCK - 1.1%
ENTERTAINMENT & LEISURE - 1.1%
2,500 News Corporation Limited (The),
ADR 78,906
- ----------------------------------------------------------
TOTAL PREFERRED STOCK
(COST $63,418) 78,906
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ASSET-BACKED SECURITIES - 0.1%
FINANCIAL SERVICES - 0.1%
$ 8,283 Merrill Lynch
Mortgage Investors,
Series 1991-I,
Class A 7.65% 01/15/12 8,291
- ----------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(COST $8,476) 8,291
- ----------------------------------------------------------
CORPORATE BONDS - 17.8%
BANKING - 4.6%
150,000 Associates
Corporation of
North America 5.75% 11/01/03 145,345
100,000 BB&T 7.25% 06/15/07 100,125
100,000 Chase Manhattan 7.25% 06/01/07 101,002
324 Nykredit 6.00% 10/01/26 44
- ----------------------------------------------------------
346,516
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 0.8%
60,000 Coca-Cola Femsa, 8.95% 11/01/06 59,469
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 1.3%
100,000 Computer Associates
International 6.375% 04/15/05 94,834
- ----------------------------------------------------------
ELECTRIC UTILITIES - 3.6%
95,000 Financiera Energy9.375% 06/15/06 82,655
200,000 Tennessee Valley
Authority 5.00% 12/18/03 190,084
- ----------------------------------------------------------
272,739
- ----------------------------------------------------------
FINANCIAL SERVICES - 4.3%
150,000 AT&T Capital 7.50% 11/15/00 150,894
100,000 GMAC 7.125% 05/01/01 101,483
69,000 Paine Webber
Group 7.00% 03/01/00 69,305
- ----------------------------------------------------------
321,682
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 1.2%
100,000 CSC Holdings 7.625% 07/15/18 92,625
- ----------------------------------------------------------
METALS - 1.4%
100,000 AK Steel 9.125% 12/15/06 103,000
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - CONTINUED
OIL & GAS - 0.6%
$ 50,000 Petroleos
Mexicanos 8.85% 09/15/07 $ 45,375
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $1,390,566) 1,336,240
- ----------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 9.3%
20,000 Federal Home
Loan Mortgage
Corporation 6.00% 03/15/08 19,895
45,000 Federal National
Mortgage
Association 6.15% 10/25/07 44,933
150,000 Federal National
Mortgage
Association 6.00% 05/15/08 145,052
100,000 Federal National
Mortgage
Association 6.50% 04/29/09 96,328
146,468 Federal National
Mortgage
Association 6.00% 01/01/14 141,466
86,528 Federal National
Mortgage
Association 6.50% 07/18/28 83,922
40,000 General Electric
Capital Mortgage
Services, Series
1993-14, Class A7 6.50% 11/25/23 36,286
44,500 General Electric
Capital Mortgage
Services, Series
1994-10,
Class A10 6.50% 03/25/24 43,460
40,000 Merrill Lynch
Mortgage Investors,
Series 1995-C3,
Class A3 7.089% 12/26/25 40,260
50,000 Prudential Home
Mortgage
Securities, Series
1994-17,
Class A6 6.25% 04/25/24 43,682
- ----------------------------------------------------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $715,339) 695,284
- ----------------------------------------------------------
MUNICIPAL BONDS - 2.1%
HOUSING - 1.7%
40,000 Baltimore Community
Development
Financing 8.20% 08/15/07 43,577
4,958 Denver Colorado
City & County
Single Family 7.25% 12/01/10 4,961
35,000 New York State
Housing Finance
Agency Service 7.50% 09/15/03 35,955
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
BALANCED FUND
SCHEDULE OF INVESTMENTS CONTINUED
Principal Interest Maturity Value
Amount Rate Date (Note 1)
MUNICIPAL BONDS - CONTINUED
HOUSING - CONTINUED
$ 40,000 Ohio Housing
Financial Agency 7.90% 10/01/14 $ 41,187
- ----------------------------------------------------------
125,680
- ----------------------------------------------------------
TRANSPORTATION - 0.4%
30,000 Oklahoma City
Airport 9.40% 11/01/10 32,875
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $150,934) 158,555
- ----------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 2.6%
SOUTH AFRICA - 1.5%
ZAR 774,000 Republic of
South Africa 13.00% 08/31/10 113,202
- ----------------------------------------------------------
UNITED KINGDOM - 1.1%
GBP 37,000 United Kingdom
Treasury 8.00% 12/07/15 78,211
- ----------------------------------------------------------
TOTAL SOVEREIGN DEBT
OBLIGATIONS (COST $220,279) 191,413
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
U.S. TREASURY OBLIGATIONS - 1.6%
$ 65,000 U.S. Treasury
Bond 6.25% 4/30/01 $ 65,792
50,000 U.S. Treasury
Bond 7.25% 08/15/22 55,859
- ----------------------------------------------------------
TOTAL U.S. TREASURY
OBLIGATIONS (COST $123,350) 121,651
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 97.6%
(COST $7,178,886)(A) 7,316,539
CASH AND OTHER ASSETS
NET OF LIABILITIES - 2.4% 181,706
- ----------------------------------------------------------
NET ASSETS - 100.0% $ 7,498,245
- ----------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$7,178,886, resulting in gross unrealized appreciation and depreciation of
$601,703 and $464,050, respectively, and net unrealized appreciation of
$137,653.
ADR - American Depository Receipt
REIT - Real Estate Investment Trust
GBP - Great Britain Pound
ZAR - South African Rand
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
BOND FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
AGENCY FOR INTERNATIONAL DEVELOPMENT BONDS - 3.6%
CENTRAL AMERICA - 2.2%
$ 125,000 Central America
International
Development,
Series F+ 10.00% 12/01/11 $ 143,800
125,000 Central America
International
Development,
Series G+ 10.00% 12/01/11 143,800
125,000 Central America
International
Development,
Series H+ 10.00% 12/01/11 143,800
- ----------------------------------------------------------
431,400
- ----------------------------------------------------------
HONDURAS - 1.4%
100,000 Republic of
Honduras
International
Development,
Series C+, 13.00% 06/01/06 123,850
100,000 Republic of
Honduras
International
Development,
Series D+ 13.00% 06/01/11 140,651
- ----------------------------------------------------------
264,501
- ----------------------------------------------------------
TOTAL AGENCY FOR INTERNATIONAL
DEVELOPMENT BONDS (COST $575,000) 695,901
- ----------------------------------------------------------
ASSET-BACKED SECURITIES - 7.3%
FINANCIAL SERVICES - 7.3%
54,848 Chase Manhattan
Grantor Trust,
Series 1996-A,
Class A 5.20% 02/15/02 54,761
750,000 Chemical Credit
Card Master
Trust, Series
1996-2, Class A 5.98% 09/15/08 730,493
113,506 Navistar Financial,
Series 1996-A,
Class A2 6.35% 11/15/02 113,860
497,889 World Omni Auto
Lease, Series
1997-B, Class A3 6.18% 11/25/03 499,034
- ----------------------------------------------------------
TOTAL ASSET-BACKED
SECURITIES (COST $1,369,437) 1,398,148
- ----------------------------------------------------------
CORPORATE BONDS - 34.4%
BANKING - 6.1%
500,000 Bank of New York 8.50% 12/15/04 539,475
225,000 Credit Suisse First
Boston - London 7.90% 05/01/07 219,052
350,000 First Union 6.55% 10/15/35 348,287
63,118 Mercantile Safe
Deposit+ 12.125% 01/02/01 63,276
- ----------------------------------------------------------
1,170,090
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - CONTINUED
BEVERAGES, FOOD & TOBACCO - 2.4%
$ 500,000 Pepsi Bottling,
144A 5.625% 02/17/09 $ 454,298
- ----------------------------------------------------------
COMMUNICATIONS - 2.6%
500,000 Harris 6.65% 08/01/06 502,339
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 2.4%
- ----------------------------------------------------------
500,000 International
Business
Machines 5.375% 02/01/09 456,035
- ----------------------------------------------------------
ELECTRIC UTILITIES - 2.5%
500,000 Consumers
Energy, Series B 6.50% 06/15/18 479,108
- ----------------------------------------------------------
ELECTRONICS - 5.1%
1,000,000 Raytheon 5.70% 11/01/03 969,948
- ----------------------------------------------------------
FINANCIAL SERVICES - 3.8%
750,000 Safeco Capital 8.072% 07/15/37 720,727
- ----------------------------------------------------------
FOREST PRODUCTS & PAPER - 1.4%
250,000 Georgia-Pacific 9.50% 05/15/22 265,141
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 3.3%
650,000 Columbia/HCA
Health, 6.73% 07/15/45 624,640
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 1.4%
250,000 News America
Holdings 10.125% 10/15/12 276,096
- ----------------------------------------------------------
OIL & GAS - 1.2%
250,000 Husky Oil 8.90% 08/15/28 242,031
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 2.2%
400,000 MCI Worldcom 8.875% 01/15/06 424,396
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $6,768,434) 6,584,849
- ----------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 31.8%
1,250,000 Federal Home
Loan Bank 5.625% 03/19/01 1,246,280
124,099 Federal Home
Loan Mortgage
Association 6.00% 05/01/09 121,097
443,668 Federal Home
Loan Mortgage
Association 6.00% 08/01/10 432,159
39,073 Federal Home
Loan Mortgage
Association 6.00% 10/01/10 38,059
1,000,000 Federal National
Mortgage
Association 5.75% 04/15/03 988,573
1,241,841 Federal National
Mortgage
Association 6.50% 07/01/28 1,201,148
356,410 Government
National Mortgage
Association 7.00% 06/15/09 361,371
229,111 Government
National Mortgage
Association 9.00% 08/15/19 243,943
310,021 Government
National Mortgage
Association 6.50% 01/15/24 300,909
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
BOND FUND
SCHEDULE OF INVESTMENTS CONTINUED
Principal Interest Maturity Value
Amount Rate Date (Note 1)
MORTGAGE-BACKED SECURITIES - CONTINUED
$ 75,951 Government
National Mortgage
Association 7.50% 12/15/27 $ 76,799
847,020 Government
National Mortgage
Association 7.00% 05/15/28 837,000
249,440 Government
National Mortgage
Association 6.50% 09/15/28 240,453
- ----------------------------------------------------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $6,166,219) 6,087,791
- ----------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 5.4%
CANADA - 5.4%
1,000,000 Province of
Ontario 7.375% 01/27/03 1,027,450
- ----------------------------------------------------------
TOTAL SOVEREIGN GOVERNMENT
OBLIGATIONS (COST $1,077,440)
- ----------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 8.6%
900,000 U.S. Treasury
Bond 7.25% 05/15/16 987,750
750,000 U.S. Treasury
Note 5.25% 11/15/28 663,750
- ----------------------------------------------------------
TOTAL U.S. TREASURY
OBLIGATIONS (COST $1,715,197) 1,651,500
- ----------------------------------------------------------
Shares Value
(Note 1)
PREFERRED STOCKS - 5.0%
ELECTRIC UTILITIES - 2.4%
9,600 Appalachian Power
8.25% Cumulative $ 241,800
8,700 Ohio Power, Series A,
8.16% Cumulative 217,500
- ----------------------------------------------------------
459,300
- ----------------------------------------------------------
OIL & GAS - 2.6%
20,000 Transcanada Pipelines,
8.75% Cumulative 507,500
- ----------------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $984,274) 966,800
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 96.1%
(COST $18,656,001) (A) 18,412,439
CASH AND OTHER ASSETS
NET OF LIABILITIES - 3.9% 740,566
- ----------------------------------------------------------
NET ASSETS - 100.0% $19,153,005
- ----------------------------------------------------------
Notes to the Schedule of Investments:
+ Restricted and Board valued security (Note 5).
(a) The aggregate identified cost for federal income tax purposes is
$18,656,001, resulting in gross unrealized appreciation and depreciation of
$202,013 and $445,575 respectively, and net unrealized depreciation of
$243,562.
144A - Securities restricted for resale to Qualified Institutional Buyers
with registration rights.
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
STANDBY INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ASSET-BACKED SECURITIES - 32.9%
$ 174,632 Arcadia
Automobile
Receivables
Trust, Series
1998-A, Class A2 5.737% 07/16/01 $ 174,882
371,270 Auto Finance
Group Receivables
Trust, Series
1997-A, Class A 6.35% 10/15/02 372,774
464,788 Auto Finance
Group Receivables
Trust, Series
1997-B, Class A 6.20% 02/15/03 465,978
335,446 Capital Asset
Research Funding,
Series 1998-A,
Class A, 144A 5.905% 12/15/05 336,390
500,000 Chase Credit Card
Master Trust,
Series 1998-6,
Class B 5.498% 09/15/04 500,315
540,000 Health Care
Receivables
Securitization
Program, Series
1996-1, Class A,
144A 7.20% 07/01/00 541,013
507,349 Mellon Auto
Grantor Trust, Series
1999-1, Class B 5.76% 10/17/05 506,121
271,466 Summit Acceptance
Auto Trust,
Series 1996-A,
Class A1, 144A 7.01% 07/15/02 272,741
412,380 UCFC Home
Equity Loan,
Series 1998-D,
Class AF1 6.105% 05/15/13 412,219
- ----------------------------------------------------------
TOTAL ASSET-BACKED
SECURITIES (COST $3,584,498) 3,582,433
- ----------------------------------------------------------
COMMERCIAL PAPER - 20.2%
445,000 Armstrong World
Industries, 144A 5.02% 07/06/1999 444,690
510,000 Case Credit 5.22% 07/06/1999 509,630
495,000 Conectiv, 144A 5.30% 07/12/1999 494,199
380,000 Dominion
Resources 5.80% 07/02/1999 379,939
375,000 Rohm & Haas,
144A 5.45% 07/06/1999 374,717
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $2,203,175) 2,203,175
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - 33.9%
BANKING - 10.3%
$ 550,000 Banco
Latinoamericano 6.70% 10/08/1999 $ 550,455
570,000 MBNA, MTN(a) 5.76% 07/07/03 565,938
- ----------------------------------------------------------
1,116,393
- ----------------------------------------------------------
COMMERCIAL SERVICES - 4.5%
500,000 Browning-Ferris
Industries 6.08% 01/18/00 495,625
- ----------------------------------------------------------
ELECTRIC UTILITIES - 9.8%
500,000 SCANA, MTN(a) 5.53% 07/14/00 500,153
550,000 Texas Utilities
Electric 9.50% 08/01/1999 572,549
- ----------------------------------------------------------
1,072,702
- ----------------------------------------------------------
FINANCIAL SERVICES - 4.6%
500,000 AT&T Capital 6.16% 12/03/1999 499,797
- ----------------------------------------------------------
REAL ESTATE - 4.7%
500,000 Federal Realty
Investment Trust,
REIT 8.875% 01/15/00 507,023
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $3,718,205) 3,691,540
- ----------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 12.0%
615,000 Federal Home
Loan Bank 5.35% 11/05/01 606,571
100,000 Federal Home
Loan Mortgage
Corporation 4.84% 07/19/1999 99,758
500,000 Federal Home
Loan Mortgage
Corportation,
Series UB 6.00% 11/15/08 497,020
95,000 Federal National
Mortgage
Association 4.79% 07/07/1999 94,925
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT &
AGENCY OBLIGATIONS (COST $1,312,473) 1,298,274
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 99.0%
(COST $10,818,351)(B) 10,775,422
CASH AND OTHER ASSETS
NET OF LIABILITIES - 1.0% 107,977
- ----------------------------------------------------------
NET ASSETS - 100.0% $10,883,399
- ----------------------------------------------------------
Notes to the Schedule of Investments:
(a) Interest rate shown reflects current rate on instrument with variable rate.
(b) The aggregate identified cost for federal income tax purposes is
$10,818,351, resulting in gross unrealized appreciation and depreciation of
$2,550 and $45,479, respectively, and net unrealized depreciation of
$42,929.
144A - Securities restricted for resale to Qualified Institutional Buyers with
registration rights.
MTN - Medium Term Note
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
TOUCHSTONE SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
EMERGING INTERNATIONAL INCOME VALUE GROWTH & TOUCHSTONE TOUCHSTONE STANDBY
GROWTH EQUITY OPPORTUNITY PLUS INCOME BALANCED BOND INCOME
FUND FUND FUND FUND FUND FUND FUND FUND(E)
ASSETS:
Investments, at value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(Note 1)(a) $11,732,214 $11,204,753 $ 8,837,133 $30,693,582 $39,499,548 $ 7,316,539 $18,412,439 $10,775,422
Cash 503,986 367,218 292,382 258,152 1,069,508 98,073 512,869 1,786
Foreign currency(b) -- 19,131 -- -- -- 10,668 -- --
Deferred organization
expense 3,743 3,868 3,743 -- 3,743 4,850 3,796 4,157
Receivables for:
Investments sold 22,944 31,493 250,625 359,448 28,829 36,855 -- --
Fund shares sold 562 467 448 118 211 184 107 450
Dividends 8,021 7,498 -- 33,885 82,485 2,645 17,590 --
Foreign tax reclaims -- 18,193 -- 590 5,758 24 1,094 --
Interest 1,392 1,271 263,798 2,349 1,845 30,329 250,526 83,962
Receivable from
Investment
Advisor (Note 6) 59,561 97,223 84,984 -- -- 73,682 61,169 83,955
- -------------------------------------------------------------------------------------------------------------------------------
Total assets 12,332,423 11,751,115 9,733,113 31,348,124 40,691,927 7,573,849 19,259,590 10,949,732
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for:
Investments
purchased -- 9,636 500,000 -- 15,024 28,263 -- --
Fund shares
redeemed 1,070 1,558 31,385 -- 31,758 2,819 4,000 1,500
Unrealized depreciation
on foreign forward
currency contracts -- -- -- -- -- 2,632 -- --
Distributions from income
and capital gains 247 448 12,535 244 325 553 976 2,008
Payable to Investment
Advisor (Note 6) -- -- -- 40,615 69,655 -- - --
Other accrued expenses 56,293 54,534 51,951 37,560 121,611 41,337 101,609 62,825
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 57,610 66,176 595,871 78,419 238,373 75,604 106,585 66,333
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS(C) $12,274,813 $11,684,939 $ 9,137,242 $31,269,705 $40,453,554 $7,498,245 $19,153,005 $10,883,399
===============================================================================================================================
COMPUTATION OF NET ASSET VALUE, REDEMPTION VALUE AND OFFERING PRICE PER SHARE:
Net assets -
Class A $ 8,889,182 $ 6,765,648 $ 5,884,135 $30,692,234 $14,564,362 $ 4,423,377 $ 4,223,738 $10,883,399
Shares outstanding -
Class A 575,965 515,877 808,859 2,636,246 848,031 344,806 425,893 1,096,116
Net asset value and
redemption price
per share -
Class A $ 15.43 $ 13.11 $ 7.27 $ 11.64 $ 17.17 $ 12.83 $ 9.92 $ 9.93
Offering price per share
- Class A(d) $ 16.37 $ 13.91 $ 7.63 $ 12.35 $ 18.22 $ 13.61 $ 10.41 $ 9.93
Net assets -
Class C $ 3,385,631 $ 4,919,291 $ 3,253,107 $ 577,471 $ 2,548,727 $ 3,074,868 $ 993,099 $ --
Shares outstanding -
Class C 226,283 388,003 460,500 50,642 160,814 248,356 103,344 --
Net asset value, offering
price and redemption
price per share
- Class C $ 14.96 $ 12.68 $ 7.06 $ 11.40 $ 15.85 $ 12.38 $ 9.61 $ --
Net assets -
Class Y $ -- $ -- $ -- $ -- $23,340,465 $ -- $13,936,168 $ --
Shares outstanding -
Class Y -- -- -- -- 1,005,733 -- 1,027,657 --
Net asset value, offering
price and redemption
price per share
- Class Y $ -- $ -- $ -- $ -- $ 23.21 $ -- $ 13.56 $ --
===============================================================================================================================
(a) Cost of
investments: $10,157,252 $10,087,841 $10,310,631 $26,354,132 $34,062,654 $ 7,178,886 $18,656,001 $10,818,351
(b) Cost of foreign
currency: $ -- $ 18,041 $ -- $ -- $ -- $ 12,461 $ -- $ --
(c) See the Statement of Changes in Net Assets for components of net assets.
(d) The offering price per share is calculated as follows: Net Asset Value
Per Share/(1-maximum sales load).
(e) The Fund does not offer classes of shares. All Fund information is shown
in the spaces corresponding to Class A.
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
TOUCHSTONE SERIES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
EMERGING INTERNATIONAL INCOME VALUE GROWTH & TOUCHSTONE TOUCHSTONE STANDBY
GROWTH EQUITY OPPORTUNITY PLUS INCOME BALANCED BOND INCOME
FUND FUND FUND FUND FUND FUND FUND FUND
INVESTMENT INCOME
(NOTE 1):
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 11,467 $ 6,970 $ 586,562 $ 19,794 $ 6,549 $100,490 $618,902 $329,330
Dividend income(a) 36,913 122,952 -- 190,746 455,648 24,624 45,599 --
- -------------------------------------------------------------------------------------------------------------------------------
Total investment
income 48,380 129,922 586,562 210,540 462,197 125,114 664,501 329,330
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory
fees (Note 3) 44,671 55,350 31,158 108,697 155,116 30,903 58,997 13,622
Sponsor fees (Note 3) 11,168 11,653 9,587 28,986 38,779 7,726 19,507 10,897
Custody, administration
and fund accounting
fees 44,626 94,347 47,243 46,402 62,011 40,417 53,790 55,861
Transfer agent fees 49,384 48,338 49,879 29,466 54,966 46,827 39,083 33,775
Registration fees 15,225 9,432 9,359 9,247 9,562 9,216 9,984 9,615
Auditing fees 10,049 11,039 10,478 9,372 9,593 8,865 10,621 6,612
Legal fees 1,949 1,908 2,507 3,859 6,123 1,253 3,258 1,884
Printing fees 2,120 4,934 5,048 7,439 2,272 5,553 2,272 9,917
Trustee fees 485 474 624 961 1,526 311 811 469
Distribution fees
- Class A 9,967 8,285 7,616 35,447 18,164 5,695 5,648 --
Distribution fees
- Class C 15,671 24,847 17,258 2,318 13,243 15,739 5,268 --
Amortization of
organization costs 3,667 3,667 3,667 -- 3,667 3,667 3,667 5,633
Miscellaneous 844 878 764 1,986 1,311 580 439 808
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses 209,826 275,152 195,188 284,180 376,333 176,752 213,345 149,093
Reimbursement
or waiver from
Investment
Advisor
(Note 6) (114,388) (163,365) (124,775) (94,239) (141,336) (112,826) (139,031) (108,228)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses 95,438 111,787 70,413 189,941 234,997 63,926 74,314 40,865
- -------------------------------------------------------------------------------------------------------------------------------
Net investment
income (loss) (47,058) 18,135 516,149 20,599 227,200 61,188 590,187 288,465
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 1,117,763 1,002,298 (1,200,294) 670,809 (291,701) 406,883 (82,551) (8,798)
Foreign currency
transactions -- (40,763) -- -- -- 1,662 -- --
- -------------------------------------------------------------------------------------------------------------------------------
1,117,763 961,535 (1,200,294) 670,809 (291,701) 408,545 (82,551) (8,798)
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 561,665 (808,554) 742,293 2,620,011 4,451,879 49,813 (803,492) (45,265)
Foreign currency
translations -- (319) -- -- -- (4,116) -- --
- -------------------------------------------------------------------------------------------------------------------------------
561,665 (808,873) 742,293 2,620,011 4,451,879 45,697 (803,492) (45,265)
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
===============================================================================================================================
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS $1,632,370 $ 170,797 $ 58,148 $3,311,419 $4,387,378 $ 515,430 $ (295,856) $ 234,402
===============================================================================================================================
(a) Net of foreign tax
withholding: $ -- $ 12,214 $ -- $ 182 $ 1,660 $ 164 $ -- $ --
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
TOUCHSTONE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TOUCHSTONE EMERGING TOUCHSTONE INTERNATIONAL TOUCHSTONE INCOME
GROWTH FUND EQUITY FUND OPPORTUNITY FUND
---------------------------------------------------------------------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ (47,058) $ (27,765) $ 18,135 $ (1,691) $ 516,149 $ 714,488
Net realized gain (loss) 1,117,763 363,157 961,535 345,939 (1,200,294) (670,556)
Net change in unrealized appreciation
(depreciation) 561,665 (340,021) (808,873) 643,481 742,293 (1,110,683)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 1,632,370 (4,629) 170,797 987,729 58,148 (1,066,751)
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A -- -- -- (6,819) (338,896) (727,740)
Class C -- -- -- -- (182,840) --
Class Y -- -- -- -- -- --
Realized capital gains
Class A -- (407,884) -- (373,319) -- --
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
Distributions in excess of net investment income
Class A -- -- -- (20,277) -- --
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
Distributions in excess of realized capital gains
Class A -- (50,275) -- -- -- --
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
Return of capital distributions
Class A -- -- -- -- -- (56,290)
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (458,159) -- (400,415) (521,736) (784,030)
- -----------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Capital Contribution - Class C (Note 7) 3,284,020 -- 5,226,105 -- 3,798,163 --
Capital Contribution - Class Y (Note 7) -- -- -- -- -- --
Proceeds from shares sold 1,021,648 5,012,537 742,258 1,630,252 862,360 3,476,133
Reinvestment of dividends and distributions (246) 418,391 (448) 398,640 440,877 623,322
Cost of shares redeemed (1,998,125) (1,581,667) (1,329,289) (501,457) (2,158,894) (2,599,216)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions 2,307,297 3,849,261 4,638,626 1,527,435 2,942,506 1,500,239
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 3,939,667 3,386,473 4,809,423 2,114,749 2,478,918 (350,542)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 8,335,146 4,948,673 6,875,516 4,760,767 6,658,324 7,008,866
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $12,274,813 $ 8,335,146 $11,684,939 $ 6,875,516 $ 9,137,242 $ 6,658,324
===================================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 9,665,879 $ 7,715,214 $ 9,605,471 $ 5,804,081 $ 13,222,161 $ 8,978,000
Undistributed (distributions in excess of) net
investment income (47,058) -- (57,939) (32,893) (5,631) --
Accumulated net realized gain (loss) 1,081,030 (47,580) 1,020,288 27,664 (2,605,790) (909,681)
Net unrealized appreciation (depreciation) 1,574,962 667,512 1,117,119 1,076,664 (1,473,498) (1,409,995)
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares
outstanding $12,274,813 $ 8,335,146 $11,684,939 $ 6,875,516 $ 9,137,242 $ 6,658,324
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
TOUCHSTONE VALUE TOUCHSTONE GROWTH TOUCHSTONE
PLUS FUND & INCOME FUND BALANCED FUND
--------------------------------------------------------------------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998 (UNAUDITED) 1998
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ 20,599 $ 40,182 $ 227,200 $ 181,174 $ 61,188 $ 88,739
Net realized gain (loss) 670,809 (608,840) (291,701) 220,365 408,545 225,430
Net change in unrealized
appreciation (depreciation) 2,620,011 1,699,825 4,451,879 (338,911) 45,697 (183,060)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 3,311,419 1,131,167 4,387,378 62,628 515,430 131,109
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (27,372) (40,182) (86,264) (183,340) (42,293) (93,863)
Class C -- -- (4,397) -- (13,328) --
Class Y -- -- (126,390) -- -- --
Realized capital gains
Class A -- -- -- (304,181) -- (185,895)
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
Distributions in excess of net investment income
Class A -- -- -- (6,836) -- (11,391)
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
Distributions in excess of realized capital gains
Class A -- -- -- (70,773) -- --
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
Return of capital distributions
Class A -- (3,702) -- (13,429) -- --
Class C -- -- -- -- -- --
Class Y -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (27,372) (43,884) (217,051) (578,559) (55,621) (291,149)
- -----------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Capital Contribution - Class C (Note 7) 318,185 -- 2,753,186 -- 3,339,459 --
Capital Contribution - Class Y (Note 7) -- -- 20,868,632 -- -- --
Proceeds from shares sold 784,471 25,939,165 1,239,444 13,903,526 480,804 2,065,886
Reinvestment of dividends and distributions 27,097 43,452 215,987 569,460 54,612 286,919
Cost of shares redeemed (211,629) (2,366) (4,054,971) (4,676,332) (1,472,526) (872,443)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions 918,124 25,980,251 21,022,278 9,796,654 2,402,349 1,480,362
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 4,202,171 27,067,534 25,192,605 9,280,723 2,862,158 1,320,322
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 27,067,534 -- 15,260,949 5,980,226 4,636,087 3,315,765
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $31,269,705 $27,067,534 $40,453,554 $15,260,949 $ 7,498,245 $ 4,636,087
===================================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $26,880,755 $25,976,551 $25,347,744 $15,278,502 $ 6,838,195 $ 4,521,372
Undistributed (distributions in excess of) net
investment income (6,773) -- 653,674 -- 8,022 1,963
Accumulated net realized gain (loss) 56,273 (608,842) 9,015,243 (66,551) 520,090 74,357
Net unrealized appreciation (depreciation) 4,339,450 1,699,825 5,436,893 48,998 131,938 38,395
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares
outstanding $31,269,705 $27,067,534 $40,453,554 $15,260,949 $ 7,498,245 $ 4,636,087
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
TOUCHSTONE TOUCHSTONE STANDBY
BOND FUND INCOME FUND(b)
------------------------------------------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 590,187 $ 218,403 $ 288,465 $ 536,968
Net realized gain (loss) (82,551) 66,845 (8,798) 15,437
Net change in unrealized appreciation
(depreciation) (803,492) 37,207 (45,265) 2,467
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations (295,856) 322,455 234,402 554,872
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A (132,813) (219,500) (291,889) (541,711)
Class C (28,776) -- -- --
Class Y (382,286) -- -- --
Realized capital gains
Class A -- (53,127) -- (2,087)
Class C (13,079) -- -- --
Class Y -- -- -- --
Distributions in excess of net investment income
Class A -- (4,091) -- --
Class C -- -- -- --
Class Y -- -- -- --
Distributions in excess of realized capital gains
Class A -- -- -- --
Class C -- -- -- --
Class Y -- -- -- --
Return of capital distributions
Class A -- -- -- --
Class C -- -- -- --
Class Y -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (556,954) (276,718) (291,889) (543,798)
- ------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Capital Contribution - Class C (Note 7) 1,139,586 -- -- --
Capital Contribution - Class Y (Note 7) 14,150,014 -- -- --
Proceeds from shares sold 518,892 4,527,950 1,276,531 8,443,462
Reinvestment of dividends and distributions 540,050 271,637 289,349 543,405
Cost of shares redeemed (1,266,234) (1,606,439) (1,882,002) (6,343,864)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from share transactions 15,082,308 3,193,148 (316,122) 2,643,003
- ------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 14,229,498 3,238,885 (373,609) 2,654,077
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,923,507 1,684,622 11,257,008 8,602,931
- ------------------------------------------------------------------------------------------------------------------------
End of period $19,153,005 $ 4,923,507 $10,883,399 $11,257,008
========================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $15,750,781 $ 4,840,284 $10,922,455 $11,238,577
Undistributed (distributions in excess of) net
investment income 3,216,647 3,657 4,066 7,490
Accumulated net realized gain (loss) 429,139 10,547 (193) 8,605
Net unrealized appreciation (depreciation) (243,562) 69,019 (42,929) 2,336
- ------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $19,153,005 $ 4,923,507 $10,883,399 $11,257,008
- ------------------------------------------------------------------------------------------------------------------------
(a) Commencement of operations: The Fund commenced operations on May 1, 1998.
(b) The Fund does not offer classes of shares. All Fund information is shown in
the spaces corresponding to Class A.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
TOUCHSTONE SERIES TRUST
FINANCIAL HIGHLIGHTS
CLASS A
SELECTED DATA FOR A SHARE OUTSTANDING:
TOUCHSTONE EMERGING GROWTH FUND
------------------------------------------------------------------------
FOR THE SIX
MONTHS FOR THE FOR THE FOR THE FOR THE FOR THE
ENDED YEAR YEAR YEAR YEAR PERIOD
JUNE 30, 1999 ENDED ENDED ENDED ENDED ENDED(a)
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.40 $13.85 $11.55 $11.52 $10.11 $10.00
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.04) (0.04) (0.03) 0.01 (0.01) 0.16
Net realized and unrealized gain (loss) on investments 2.07 0.37 3.71 1.20 2.29 0.11
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.03 0.33 3.68 1.21 2.28 0.27
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- -- (0.01) (0.03) (0.15)
Realized capital gains -- (0.78) (1.38) (1.17) (0.84) (0.01)
Return of capital -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.78) (1.38) (1.18) (0.87) (0.16)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.43 $13.40 $13.85 $11.55 $11.52 $10.11
==================================================================================================================================
Total return(b) 15.06% 2.57% 32.20% 10.56% 22.56% 2.72%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $8,889 $8,335 $4,949 $2,873 $2,520 $1,038
Ratios to average net assets(c):
Expenses 1.50%(d) 1.50% 1.50% 1.50% 1.50% 1.75%(d)
Net investment income (loss) (0.63)%(d)(0.41)% (0.30)% (0.12)% (0.05)% 6.10%(d)
Portfolio turnover 59% 78% 101% 117% 109% 150%
==================================================================================================================================
24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOUCHSTONE INTERNATIONAL EQUITY FUND
------------------------------------------------------------------------
FOR THE SIX
MONTHS FOR THE FOR THE FOR THE FOR THE FOR THE
ENDED YEAR YEAR YEAR YEAR PERIOD
JUNE 30, 1999 ENDED ENDED ENDED ENDED ENDED(a)
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.89 $11.41 $10.63 $ 9.58 $ 9.12 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.04 0.00(e) 0.02 0.05 0.21 0.00
Net realized and unrealized gain (loss) on investments 0.18 2.27 1.64 1.06 0.47 (0.88)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.22 2.27 1.66 1.11 0.68 (0.88)
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (0.05) (0.02) (0.06) (0.22) --
Realized capital gains -- (0.74) (0.86) -- -- --
Return of capital -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.79) (0.88) (0.06) (0.22) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.11 $12.89 $11.41 $10.63 $ 9.58 $ 9.12
==================================================================================================================================
Total return(b) 1.71% 19.94% 15.57% 11.61% 5.29% (8.80)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $6,766 $6,876 $4,761 $3,449 $2,617 $2,282
Ratios to average net assets(c):
Expenses 1.60%(d) 1.60% 1.60% 1.60% 1.60% 1.85%(d)
Net investment income (loss) 0.63%(d) (0.03)% 0.17% 0.42% 0.11% (0.36%)(d)
Portfolio turnover 97% 138% 151% 86% 90% 7%
==================================================================================================================================
<PAGE>
TOUCHSTONE INCOME OPPORTUNITY FUND
------------------------------------------------------------------------
FOR THE SIX
MONTHS FOR THE FOR THE FOR THE FOR THE FOR THE
ENDED YEAR YEAR YEAR YEAR PERIOD
JUNE 30, 1999 ENDED ENDED ENDED ENDED ENDED(a)
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.63 $ 9.89 $10.90 $ 9.83 $ 9.08 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.41 0.90 1.24 1.12 1.19 0.22
Net realized and unrealized gain (loss) on investments (0.35) (2.18) (0.23) 1.38 0.77 (0.94)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.06 (1.28) 1.01 2.50 1.96 (0.72)
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.42) (0.91) (1.22) (1.12) (1.21) (0.20)
Realized capital gains -- -- (0.80) (0.31) -- --
Return of capital -- (0.07) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.42) (0.98) (2.02) (1.43) (1.21) (0.20)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.27 $ 7.63 $ 9.89 $10.90 $ 9.83 $ 9.08
===================================================================================================================================
Total return(b) 0.20% (13.77)% 9.49% 26.66% 23.19% (7.20)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $5,884 $6,658 $7,009 $4,579 $1,369 $ 926
Ratios to average net assets(c):
Expenses 1.20%(d) 1.20% 1.20% 1.20% 1.20% 1.45%(d)
Net investment income (loss) 11.04%(d) 10.02% 11.19% 11.29% 12.42% 8.60%(d)
Portfolio turnover 150% 283% 270% 222% 120% 144%
==================================================================================================================================
(a) The Fund commenced operations on October 3, 1994.
(b) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown. (Note 6)
(c) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been
higher.
(d) Ratios are annualized.
(e) Amount rounds to less than $0.01.
The accompanying notes are an integral part of the financial statements.
</TABLE>
25
<PAGE>
<TABLE>
TOUCHSTONE SERIES TRUST
FINANCIAL HIGHLIGHTS
<CAPTION>
CLASS A - CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING:
TOUCHSTONE
VALUE PLUS FUND TOUCHSTONE GROWTH & INCOME FUND
-------------------- ----------------------------------------------------------
FOR THE
SIX MONTHS
ENDED FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
JUNE 30, PERIOD SIX-MONTHS YEAR YEAR YEAR YEAR PERIOD
1999 ENDED(a) ENDED ENDED ENDED ENDED ENDED ENDED(b)
(UNAUDITED) 12/31/98 (UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.41 $ 10.00 $ 15.47 $ 15.06 $14.03 $13.14 $10.02 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.01 0.02 0.09 0.19 0.09 0.12 0.05 0.86
Net realized and unrealized gain
(loss) on investments 1.23 0.41 1.71 0.84(g) 2.78 2.12 3.46 (0.84)
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.24 0.43 1.80 1.03 2.87 2.24 3.51 0.02
- -------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income (0.01) (0.02) (0.10) (0.20) (0.11) (0.12) (0.16) 0.00
Realized capital gains -- -- -- (0.40) (1.73) (1.23) (0.23) 0.00
Return of capital -- 0.00(f) -- (0.02) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.01) (0.02) (0.10) (0.62) (1.84) (1.35) (0.39) --
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.64 $ 10.41 $ 17.17 $ 15.47 $15.06 $14.03 $13.14 $10.02
===============================================================================================================================
Total return(c) 11.92% 4.29% 11.65% 6.87% 20.70% 16.95% 35.14% 0.20%
Ratios and supplemental data:
Net assets at end of period (000s) $30,692 $27,068 $14,564 $15,261 $5,980 $3,659 $1,500 $ 20
Ratios to average net assets(d):
Expenses 1.30%(e) 1.30%(e) 1.30%(e) 1.30% 1.30% 1.30% 1.30% 1.55%(e)
Net investment income (loss) 0.15%(e) 0.25%(e) 1.09%(e) 1.50% 0.67% 0.55% 0.56% 0.56%(e)
Portfolio turnover 23% 0.34% 28% 64% 170% 92% 102% 10%
===============================================================================================================================
26
<PAGE>
TOUCHSTONE BALANCED FUND
-------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE FOR THE
JUNE 30, 1999 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED(b)
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.09 $12.42 $12.48 $11.34 $ 9.97 $10.00
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.12 0.25 0.27 0.30 0.31 0.08
Net realized and unrealized gain
(loss) on investments 0.74 0.23 2.09 1.59 1.99 (0.05)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.86 0.48 2.36 1.89 2.30 0.03
- -----------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income (0.12) (0.30) (0.30) (0.30) (0.33) (0.06)
Realized capital gains -- (0.51) (2.12) (0.45) (0.60) --
Return of capital -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.12) (0.81) (2.42) (0.75) (0.93) (0.06)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.83 $12.09 $12.42 $12.48 $11.34 $ 9.97
=======================================================================================================================
Total return(c) 7.13% 3.98% 19.25% 16.86% 23.24% 23.24%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $4,423 $4,636 $3,316 $2,085 $1,502 $1,001
Ratios to average net assets(d):
Expenses 1.35%(e) 1.35% 1.35% 1.35% 1.35% 1.60%(e)
Net investment income (loss) 1.89%(e) 2.11% 2.07% 2.19% 2.39% 2.75%(e)
Portfolio turnover 47% 59% 120% 88% 121% 7%
=======================================================================================================================
(a) The Fund commenced operations on May 1, 1998. (b) The Fund commenced
operations on October 3, 1994.
(c) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown. (Note 6)
(d) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been
higher.
(e) Ratios are annualized.
(f) Amount rounds to less than $0.01.
(g) The amount shown for a share outstanding does not correspond with the
aggregate net loss on investments for the period due to the timing of sales
and repurchases of Fund shares in relation to fluctuating market values of
the investments of the Fund.
The accompanying notes are an integral part of the financial statements.
27
</TABLE>
<PAGE>
TOUCHSTONE SERIES TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A - CONTINUED
SELECTED DATA FOR A SHARE OUTSTANDING:
TOUCHSTONE BOND FUND
-------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE FOR THE
JUNE 30, 1999 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED(a)
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.39 $10.22 $10.17 $10.61 $ 9.88 $10.00
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 0.55 0.61 0.71 0.56 1.15
Net realized and unrealized gain
(loss) on investments (0.47) 0.30 0.11 (0.43) 1.07 (1.12)
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.44) 0.85 0.72 0.28 1.63 0.03
- -----------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income (0.03) (0.57) (0.66) (0.70) (0.86) (0.15)
Realized capital gains -- (0.11) (0.01) (0.02) (0.04) --
Return of capital -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.03) (0.68) (0.67) (0.72) (0.90) (0.15)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.92 $10.39 $10.22 $10.17 $10.61 $ 9.88
=======================================================================================================================
Total return(b) (1.66)% 8.56% 7.30% 2.85% 16.95% 0.28%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $4,224 $4,924 $1,685 $ 821 $ 523 $ 16
Ratios to average net assets(c):
Expenses 0.90%(d) 0.90% 0.90% 0.90% 0.90% 1.15%(d)
Net investment income (loss) 5.90%(d) 5.68% 6.08% 6.01% 6.21% 5.58%(d)
Portfolio turnover 19% 170% 88% 64% 78% 11%
=======================================================================================================================
28
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOUCHSTONE STANDBY INCOME FUND(f)
-------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE FOR THE
JUNE 30, 1999 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED(a)
(UNAUDITED) 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.98 $ 9.97 $ 9.98 $10.01 $10.03 $10.00
- -----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.26 0.52 0.51 0.46 0.55 0.11
Net realized and unrealized gain
(loss) on investments (0.05) 0.01 -- 0.01 (0.02) 0.03
- -----------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.21 0.53 0.51 0.47 0.53 0.14
- -----------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income (0.26) (0.52) (0.52) (0.50) (0.55) (0.11)
Realized capital gains -- (0.00)(e) -- -- -- --
Return of capital -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.26) (0.52) (0.52) (0.50) (0.55) (0.11)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.93 $ 9.98 $ 9.97 $ 9.98 $10.01 $10.03
=======================================================================================================================
Total return(b) 2.15% 5.49% 5.21% 4.80% 5.71% 1.40%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $10,883 $11,257 $8,603 $6,456 $5,910 $5,048
Ratios to average net assets(c):
Expenses 0.75%(d) 0.75% 0.75% 0.75% 0.75% 1.00%(d)
Net investment income (loss) 5.29%(d) 5.17% 5.14% 4.88% 5.32% 4.54%(d)
Portfolio turnover 41% 683% 285% 20% 142% 0%
=======================================================================================================================
(a) The Fund commenced operations on October 3, 1994.
(b) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown. (Note 6)
(c) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been
higher.
(d) Ratios are annualized.
(e) Amount rounds to less than $0.01.
(f) The Fund does not offer classes of shares. All Fund information is shown in
this Class A Table.
The accompanying notes are an integral part of the financial statements.
29
</TABLE>
<PAGE>
TOUCHSTONE SERIES TRUST
FINANCIAL HIGHLIGHTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
CLASS C(A)
SELECTED DATA FOR A SHARE OUTSTANDING:
TOUCHSTONE
TOUCHSTONE TOUCHSTONE INCOME TOUCHSTONE TOUCHSTONE TOUCHSTONE
EMERGING INTERNATIONAL OPPORTUNITY VALUE PLUS GROWTH & BALANCED TOUCHSTONE
GROWTH FUND EQUITY FUND FUND FUND INCOME FUND FUND BOND FUND
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.04 $12.51 $ 7.42 $10.26 $14.26 $11.65 $10.08
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.10) (0.12) 0.37 (0.03) 0.03 0.07 0.26
Net realized and unrealized gain
(loss) on investments 2.02 0.29 (0.34) 1.17 1.58 0.71 (0.46)
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.92 0.17 0.03 1.14 1.61 0.78 (0.20)
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- -- (0.39) -- (0.02) (0.05) (0.27)
Realized capital gains -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- (0.39) -- (0.02) (0.05) (0.27)
Net asset value, end of period $14.96 $12.68 $ 7.06 $11.40 $15.85 $12.38 $ 9.61
===================================================================================================================================
Total Return(b) 14.72% 1.36% (0.07)% 11.11% 11.34% 6.73% (2.01)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $3,386 $4,919 $3,253 $ 577 $2,549 $3,075 $ 993
Ratios to average net assets(c)
Expenses 2.25%(d) 2.35%(d) 1.95%(d) 2.05%(d) 2.05%(d) 2.10%(d) 1.65%(d)
Net investment income (loss) (1.38)%(d) (0.12)%(d) 10.27%(d) (0.56)%(d) 0.34%(d) 1.14%(d) 5.15%(d)
Portfolio turnover 59% 97% 150% 23% 28% 47% 19%
===================================================================================================================================
(a) The inception date of Class C shares of all Funds was January 1, 1999.
(b) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown. (Note 6)
(c) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been
higher.
(d) Ratios are annualized.
The accompanying notes are an integral part of the financial statements.
</TABLE>
30
<PAGE>
<TABLE>
TOUCHSTONE SERIES TRUST
FINANCIAL HIGHLIGHTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<CAPTION>
CLASS Y(a)
SELECTED DATA FOR A SHARE OUTSTANDING:
TOUCHSTONE GROWTH TOUCHSTONE
& INCOME FUND BOND FUND
-------------------- --------------------
<S> <C> <C>
Net asset value, beginning of period $ 20.87 $ 14.15
- ----------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.78 3.49
Net realized and unrealized gain (loss) on investments 1.69 (3.72)
- ----------------------------------------------------------------------------------------------------------------
Total from investment operations 2.47 (0.23)
- ----------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.13) (0.36)
Realized capital gains -- --
Total dividends and distributions (0.13) (0.36)
Net asset value, end of period $ 23.21 $ 13.56
Total Return (b) 11.85% (1.52)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $ 23,340 $ 13,936
Ratios to average net assets (c)
Expenses 1.05%(d) 0.65%(d)
Net investment income (loss) 1.33%(d) 6.17%(d)
Portfolio turnover 28% 19%
================================================================================================================
(a) The inception date of Class Y shares of all Funds was January 1, 1999.
(b) The return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the period shown. (Note 6)
(c) If the waiver and reimbursement had not been in place for the periods
listed, the ratios of expenses to average net assets would have been
higher.
(d) Ratios are annualized.
The accompanying notes are an integral part of the financial statements.
31
</TABLE>
<PAGE>
TOUCHSTONE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Touchstone Series Trust (the "Trust"), formerly Select Advisors Trust A was
organized as a Massachusetts business trust on February 7, 1994 and is
registered under the Investment Company Act of 1940, as amended ("the Act"), as
an open-end management investment company. The Trust consists of eight Funds,
each having distinct investment objectives and policies: Touchstone Emerging
Growth Fund ("Emerging Growth Fund"), Touchstone International Equity Fund
("International Equity Fund"), Touchstone Income Opportunity Fund ("Income
Opportunity Fund"), Touchstone Value Plus Fund ("Value Plus Fund"), Touchstone
Growth & Income Fund ("Growth & Income Fund"), Touchstone Balanced Fund
("Balanced Fund"), Touchstone Bond Fund ("Bond Fund") and Touchstone Standby
Income Fund ("Standby Income Fund") (each a "Fund" and collectively, the
"Funds").
Each Fund, other than the Growth & Income Fund, Bond Fund and Standby Income
Fund, is divided into two classes of shares: class A shares ("Class A Shares")
and class C shares ("Class C Shares"). The Growth & Income Fund and the Bond
Fund also offer class Y shares ("Class Y Shares"), which are not available for
sale to the public. The Standby Income Fund does not offer classes of shares.
As of June 30, 1999, Touchstone Advisors, Inc. a subsidiary of Western-Southern
Life Assurance Company ("Western-Southern"), and Western-Southern owned 24.1%,
55.5%, 23.0%, 95.1%, 12.3%, 42.7% and 10.5% of the outstanding Class A Shares
and 60.3%, 73.5%, 40.0%, 49.4%, 8.8%, 59.1%, and 13.7% of the outstanding Class
C Shares of the Emerging Growth Fund, the International Equity Fund, the Income
Opportunity Fund, the Value Plus Fund, the Growth & Income Fund, the Balanced
Fund, and the Bond Fund, respectively. Touchstone Advisors, Inc. and
Western-Southern owned 62.0% of the outstanding shares of the Standby Income
Fund as of June 30, 1999.
The accounting policies are in conformity with generally accepted accounting
principles ("GAAP") for investment companies. The preparation of financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the related amounts and disclosures in the financial
statements. Actual results could differ from these estimates.
The following is a summary of the significant accounting policies of the Funds:
INVESTMENT VALUATION. Securities for which market quotations are readily
available are valued at the last sale price on a national securities exchange,
or, in the absence of recorded sales, at the readily available closing bid price
in the over-the-counter market. Securities quoted in foreign currencies are
translated into U.S. dollars at the current exchange rate. Debt securities are
valued by a pricing service which determines valuations based upon market
transactions for normal, institutional-size trading units of similar securities.
Securities or other assets for which market quotations are not readily available
are valued at fair value in good faith under consistently applied procedures in
accordance with procedures established by the Trustees of the Trust. Such
procedures include the use of independent pricing services, which use prices
based upon yields or prices of securities of comparable quality, coupon,
maturity and type; indications as to values from dealers; and general market
conditions. All portfolio securities with a remaining maturity of less than 60
days are valued at amortized cost, which approximates market.
FOREIGN CURRENCY TRANSLATION. The accounting records of the Funds are maintained
in U.S. dollars. The market value of investment securities, other assets
32
<PAGE>
TOUCHSTONE SERIES TRUST
and liabilities and forward contracts denominated in foreign currencies are
translated into U.S. dollars at the prevailing exchange rates at the end of the
period. Purchases and sales of securities, income receipts, and expense payments
are translated at the exchange rate prevailing on the respective dates of such
transactions. Reported net realized gains and losses on foreign currency
transactions represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions and
the difference between the amount of net investment income accrued and the U.S.
dollar amount actually received.
The effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of these securities, but are included with net realized
and unrealized gain or loss on investments.
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date except
that certain dividends from foreign securities where the ex-dividend date has
passed are recorded as soon as the Trust is informed of the ex-dividend date.
Interest income, which includes the amortization of premium and accretion of
discount, if any, is recorded on an accrual basis. Dividend and interest income
is recorded net of foreign taxes where recovery of such taxes is not assured.
DIVIDENDS AND DISTRIBUTIONS. Substantially all of the net investment income of
the Income Opportunity Fund and the Bond Fund are declared as dividends and paid
monthly. Substantially all of the net investment income of the Value Plus Fund
and the Balanced Fund are declared as dividends and paid quarterly.
Substantially all of the net investment income of the Growth & Income Fund is
currently declared as dividends and paid quarterly. For the months of January
1999 through March 1999, the Growth & Income Fund declared and paid dividends
monthly. Substantially all of the net investment income of the Emerging Growth
Fund and the International Equity Fund are declared as dividends and paid
annually. It is the policy of the Standby Income Fund to record income dividends
daily and distribute them monthly. Distributions to shareholders of net realized
capital gains, if any, are declared and paid annually. Dividends and
distributions are recorded on the ex-dividend date and are reinvested at net
asset value.
Income and realized capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassification, are primarily due to non-deductible organization costs,
passive foreign investment companies, foreign currency transactions, losses
deferred due to wash sales, and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid-in capital. Undistributed net
investment income and accumulated net realized gain or loss from the Funds may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end is
distributed in the following year.
ORGANIZATION EXPENSE. Organization expenses attributable to the Funds were
deferred and are being amortized by each Fund on a straight-line basis over a
five-year period from commencement of operations. The amount paid by the Trust
on any redemption by Touchstone Advisors, Inc. or any other then-current holder
of the organizational seed capital shares ("Initial Shares") of the Fund will be
reduced by a portion of any unamortized organization expenses of the Fund,
determined by the proportion of the
33
<PAGE>
TOUCHSTONE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS CONTINUED
number of the Initial Shares of the Fund redeemed to the number of the Initial
Shares of the Fund then outstanding after taking into account any prior
redemptions of the Initial Shares of the Fund. The amount of such reduction in
excess of the unamortized organization expenses of the Fund, if any, shall be
contributed by the Fund.
FEDERAL TAXES. Each Fund of the Trust is treated as a separate entity for
federal income tax purposes. Each Fund's policy is to comply with the provisions
of the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to distribute substantially all of its income, and net
realized capital gains, if any, within the prescribed time periods. Accordingly,
no provision for federal income tax is necessary.
WRITTEN OPTIONS. Each Fund may enter into written option agreements. The premium
received for a written option is recorded as an asset with an equivalent
liability. The liability is marked-to-market based on the option's quoted daily
settlement price. When an option expires or the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or loss if the cost of the
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security
and the liability related to such option is eliminated. When a written call
option is exercised, the Fund realizes a gain or loss from the sale of the
underlying security and the proceeds from such sale are increased by the premium
originally received. If a written put option is exercised, the amount of the
premium originally received will reduce the cost of the security which the Fund
purchased.
FORWARD FOREIGN CURRENCY AND SPOT CONTRACTS. Each Fund may enter into forward
foreign currency and spot contracts to protect securities and related
receivables and payables against fluctuations in foreign currency rates. A
forward contract is an agreement to buy or sell currencies of different
countries on a specified future date at a specified rate.
Risks associated with such contracts include the movement in the value of the
foreign currency relative to the U.S. dollar and the ability of the counterparty
to perform. The market value of the contract will fluctuate with changes in
currency exchange rates. Contracts are valued daily based on procedures
established by and under the general supervision of the Trustees of the Trust
and the change in the market value is recorded by the Funds as unrealized
appreciation and depreciation of forward foreign currency contracts. As of June
30, 1999, the following Funds had the following open forward foreign currency
and spot contracts:
<TABLE>
<CAPTION>
Unrealized
Contracts to Appreciation/
Portfolio Name Maturity Date Deliver/Receive In Exchange For Value (Depreciation)
<S> <C> <C> <C> <C> <C>
Balanced Fund
Sales 9/24/99 GBP 41,520 $66,042 $65,484 $ 558
9/13/99 ZAR 565,020 90,403 93,593 (3,190)
- -------------------------------------------------------------------------------------------------------------------
$(2,632)
===================================================================================================================
GBP Great British Pound
ZAR South African Rand
Unrealized
Contracts to Appreciation/
Portfolio Name Maturity Date Deliver/Receive In Exchange For Value (Depreciation)
International Equity Fund
Sales 7/01/99 JPY 121,550 $1,005 $1,005 $ --
- -------------------------------------------------------------------------------------------------------------------
JPY Japanese Yen
</TABLE>
REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements, which are
agreements pursuant to which securities are acquired by the Fund from a third
party with the commitment that they will be repurchased by the seller at a fixed
price on an agreed upon date. Each Fund may enter into repurchase agreements
with banks or lenders meeting the creditworthiness standards
34
<PAGE>
TOUCHSTONE SERIES TRUST
established by the Trustees of the Trust. The Fund, through its custodian,
receives as collateral, delivery of the underlying securities, whose market
value is required to be at least 102% of the resale price at the time of
purchase. The resale price reflects the purchase price plus an agreed upon rate
of interest. In the event of counterparty default, the Fund has the right to use
the collateral to offset losses incurred.
SECURITY TRANSACTIONS. Securities transactions are recorded on a trade date
basis. For financial and tax reporting purposes, realized gains and losses are
determined on the basis of specific lot identification.
EXPENSES. Expenses incurred by the Trust with respect to any two or more Funds
in the Trust are prorated to each Fund in the Trust, except where allocations of
direct expenses to each Fund can otherwise be made fairly. Expenses directly
attributable to a Fund are charged to that Fund. Expenses directly attributable
to a class are charged to that class. Other expenses of each Fund are further
allocated to each Class of shares based on their relative net asset values.
2. RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
Some of the Funds may invest in securities of foreign issuers. Investing in
securities issued by companies whose principal business activities are outside
the United States may involve significant risks not present in domestic
investments. For example, there is generally less publicly available information
about foreign companies, particularly those not subject to the disclosure and
reporting requirements of the U.S. securities laws. Foreign issuers are
generally not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Fund, political or financial instability or diplomatic and
other developments which could affect such investments. Foreign stock markets,
while growing in volume and sophistication, are generally not as developed as
those in the United States, and securities of some foreign issuers (particularly
those located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. companies. In general, there is less overall
governmental supervision and regulation of foreign securities markets,
broker-dealers, and issuers than in the U.S.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISOR. The Trust has an investment advisory agreement with
Touchstone Advisors, Inc. (the "Advisor"), a subsidiary of Western-Southern Life
Assurance Company ("Western Southern"). Under the terms of the investment
advisory agreement, each Fund pays an investment advisory fee that is computed
daily and paid monthly. For the six months ended June 30, 1999, each Fund
incurred the following investment advisory fees equal on an annual basis to the
following percentages of the average daily net assets of the Fund.
Emerging International Income Value
Growth Equity Opportunity Plus
Fund Fund Fund Fund
Rate 0.80% 0.95% 0.65% 0.75%
=====================================================================
Growth & Standby
Income Balanced Bond Income
Fund Fund Fund Fund
Rate 0.80% 0.80% 0.55% 0.25%
=====================================================================
35
<PAGE>
TOUCHSTONE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS CONTINUED
Subject to review and approval by the Board of Trustees, the Advisor may enter
into certain sub-advisory agreements for the investment advisory services in
connection with the management of each of the Funds. The Advisor pays each
sub-advisor a fee for services provided using an annual rate, as specified
below, that is computed daily and paid monthly based on average daily net
assets. As of June 30, 1999, the following sub-advisory agreements were
in place:
EMERGING GROWTH FUND
David L. Babson & Company, Inc. 0.50%
Westfield Capital Management Company, Inc. 0.45% on the first $10 million
0.40% on the next $40 million
0.35% thereafter
INTERNATIONAL EQUITY FUND
Credit Suisse Asset Management 0.85% on the first $30 million
0.80% on the next $20 million
0.70% on the next $20 million
0.60% thereafter
INCOME OPPORTUNITY FUND
Alliance Capital Management L.P. 0.40% on the first $50 million
0.35% on the next $20
million 0.30% on the next
$20 million 0.25%
thereafter
VALUE PLUS FUND
Fort Washington Investment Advisors, Inc. 0.45%
GROWTH & INCOME FUND
Scudder Kemper Investments, Inc. 0.50% on the first $150 million
0.45% thereafter
BALANCED FUND
OpCap Advisors, Inc. 0.60% on the first $20 million*
0.50% on the next $30 million*
0.40% thereafter*
BOND FUND
Fort Washington Investment Advisors, Inc. 0.30%
STANDBY INCOME FUND
Fort Washington Investment Advisors, Inc. 0.15%
* Includes assets of the Balanced Fund of the Trust and the Balanced Fund of
the Touchstone Variable Series Trust (for which OpCap Advisors, Inc. also
acts in an investment advisory capacity).
Fort Washington Investment Advisors, Inc., is an affiliate of the Advisor.
DISTRIBUTION AND SERVICE PLAN. Under the Trust's Distribution and Service Plan
in accordance with Rule 12b-1 under the Act, the Trust retains Touchstone
Securities, Inc. ("Distributor"), a subsidiary of Western-Southern, as a service
agent of the Trust and as the principal underwriter of the shares of each Fund.
Under the Distribution Plan, Class C Shares of each Fund pay a fee to the
Distributor in an amount computed at an annual rate of 0.75% of the average
daily net assets of the Fund to finance activity that is principally intended to
result in the sale of Class C Shares of the Fund. Under the Service Plan, Class
A Shares and Class C Shares of each Fund pay a fee to the Distributor in an
amount computed at an annual rate of 0.25% of the average daily net assets of
the Fund for the provision of certain services to the holders of Class A Shares
and Class C Shares.
36
<PAGE>
TOUCHSTONE SERIES TRUST
SPONSOR. The Trust, on behalf of each Fund, has entered into a Sponsor Agreement
with the Advisor. The Advisor provides oversight of the various service
providers to the Trust, including the Trust's administrator, custodian and
transfer agent. The Advisor receives a fee from each Fund equal on an annual
basis to 0.20% of the average daily net assets of that Fund. The Advisor has
advised the Trust that it will waive all fees under the Sponsor Agreement
through December 31, 1999. The Sponsor Agreement may be terminated by the
Sponsor or by the Trust on not less than 30 days prior written notice.
TRUSTEES. Each Trustee who is not an "interested person" (as defined in the Act)
of the Trust receives an aggregate of $5,000 annually plus $1,000 per meeting
attended, as well as reimbursement for reasonable out-of-pocket expenses from
the Trust, which are included in separate annual reports. For six months ended
June 30, 1999 the Trust incurred $5,661 in Trustee fees which was prorated to
each Fund.
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
Investment transactions (excluding purchases and sales of U.S. government agency
obligations and excluding short-term investments) for six months ended June 30,
1999, were as follows:
Cost of Purchases Proceeds from Sales
Emerging Growth Fund $ 6,268,353 $ 6,752,293
International Equity Fund 10,617,408 10,889,148
Income Opportunity Fund 13,686,833 14,413,704
Value Plus Fund 7,249,755 6,466,348
Growth & Income Fund 10,782,267 13,923,647
Balanced Fund 3,081,163 3,672,774
Bond Fund 1,829,835 2,467,905
Standby Income Fund 4,173,212 2,654,832
The following Funds had transactions in U.S. government and U.S. government
agency obligations (excluding short-term investments):
Cost of Purchases Proceeds from Sales
Balanced Fund $ 356,816 $ 437,041
Bond Fund 1,715,016 1,569,602
Standby Income Fund 1,117,792 550,000
5. RESTRICTED SECURITIES
Restricted securities may be difficult to dispose of and involve time-consuming
negotiation and expense. Prompt sale of these securities may involve the seller
taking a discount to the security's stated market value. As of June 30, 1999,
Bond Fund held restricted securities valued by the trustees of the Trust at
$759,177, representing 3.96% of net assets. Acquisition date and cost of each
are as follows:
Acquisition Date Cost
Mercantile Safe Deposit 3/28/85 $ 71,378
Central America, Series F 8/1/86 130,000
Central America, Series G 8/1/86 130,000
Central America, Series H 8/1/86 130,000
Republic of Honduras, Series C 5/1/88 100,000
Republic of Honduras, Series D 5/1/88 100,000
37
<PAGE>
TOUCHSTONE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS CONTINUED
The Bond Portfolio, a series of Select Advisors Portfolios, received these
securities from Western-Southern on October 4, 1994, in exchange for a
proportionate interest in the Bond Portfolio. As part of a subsequent
reorganization, these securities were redeemed in kind and acquired by the Bond
Fund. (Note 7)
As of June 30, 1999, Income Opportunity held restricted securities valued by the
trustees of the Trust at $200,000 representing 2.19% of net assets. Acquisition
date and cost of each are as follows:
Acquisition Date Cost
FSW International 5/7/97 $487,500
NTS Steel Group 11/15/96 145,000
6. EXPENSE REIMBURSEMENTS
The Advisor has agreed to reimburse each Fund so that, following such
reimbursement, the aggregate total operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) of each Fund are not
greater, on an annual basis, than the percentage of average daily net assets of
the Fund listed below for six months ended June 30, 1999.
<TABLE>
<CAPTION>
Emerging International Income Value Growth & Standby
Growth Equity Opportunity Plus Income Balanced Bond Income
Fund Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Voluntary Expense Limit -
Class A 1.50% 1.60% 1.20% 1.30% 1.30% 1.35% 0.90% 0.75%
Voluntary Expense Limit -
Class C 2.25% 2.35% 1.95% 2.05% 2.05% 2.10% 1.65% --
Voluntary Expense Limit -
Class Y -- -- -- -- 1.05% -- 0.65% --
Amount of Reimbursement
to Fund $114,388 $163,365 $124,775 $94,239 $141,336 $112,826 $139,031 $108,228
=================================================================================================================
</TABLE>
7. CAPITAL CONTRIBUTION
Effective immediately after the close of business on December 31, 1998, each
series of Select Advisors Trust C and each series of Select Advisors Trust A
withdrew its assets (net of liabilities) from the corresponding series of Select
Advisors Portfolios. Each Select Advisors Trust A Fund then acquired all of the
assets (net of the liabilities) of the corresponding Select Advisors Trust C
Fund in exchange for Class C shares of such Select Advisors Trust A Fund. In
addition, where applicable, the Western-Southern Life Insurance Company Separate
Account A withdrew its assets from each Portfolio of Select Advisors Portfolios
in which it invested and reinvested such assets in Class Y shares of the
corresponding Select Advisors Trust A Fund. Select Advisors Trust A was renamed
Touchstone Series Trust at the time of these transactions. Thus, an initial
capital contribution to each Fund of Touchstone Series Trust equal to the amount
of the respective Select Advisors Trust C Fund's and Western-Southern Life
Insurance Company Separate Account A's net assets was made at that time.
8. CAPITAL SHARE TRANSACTIONS
Transactions in capital stock were as follows for the following periods and
classes of each Fund:
38
<PAGE>
TOUCHSTONE SERIES TRUST
<TABLE>
<CAPTION>
TOUCHSTONE EMERGING GROWTH FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding (Class A):
Shares sold 61,732 $ 1,833,433 343,695 $ 5,012,537
Reinvestment of dividends and distributions (21) (246) 32,355 418,391
- ---------------------------------------------------------------------------------------------------
61,711 833,187 376,050 5,430,928
Shares redeemed (107,715) (1,473,338) (111,410) (1,581,667)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (46,004) $ (640,151) 264,640 $ 3,849,261
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class C):
Shares sold 14,380 $ 188,215 -- $ --
Reinvestment of dividends and distributions -- -- -- --
- ---------------------------------------------------------------------------------------------------
14,380 188,215 -- --
Shares redeemed (39,982) (524,787) -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (25,602) $ (336,572) -- $ --
===================================================================================================
<CAPTION>
TOUCHSTONE INTERNATIONAL EQUITY FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding (Class A):
Shares sold 43,171 $ 550,135 123,496 $ 1,630,252
Reinvestment of dividends and distributions (35) (448) 30,828 398,640
- ---------------------------------------------------------------------------------------------------
43,136 549,686 154,324 2,028,892
Shares redeemed (60,544) (773,072) (38,129) (501,457)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (17,408) $ (223,386) 116,195 $ 1,527,435
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class C):
Shares sold 15,425 $ 192,123 -- $ --
Reinvestment of dividends and distributions -- -- -- --
- ---------------------------------------------------------------------------------------------------
15,425 192,124 -- --
Shares redeemed (45,196) (556,217) -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (29,771) $ (364,093) -- $ --
===================================================================================================
<CAPTION>
TOUCHSTONE INCOME OPPORTUNITY FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding (Class A):
Shares sold 86,505 $ 647,909 374,781 $ 3,476,133
Reinvestment of dividends
and distributions 38,791 288,318 71,619 623,322
- ---------------------------------------------------------------------------------------------------
125,296 936,227 446,400 4,099,455
Shares redeemed (188,570) (1,415,497) (283,285) (2,599,216)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (63,274) $(479,270) 163,115 $ 1,500,239
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class C):
Shares sold 29,264 $ 214,451 -- $ --
Reinvestment of dividends
and distributions 21,121 152,559 -- --
- ---------------------------------------------------------------------------------------------------
50,385 367,010 -- --
Shares redeemed (101,462) (743,397) -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (51,077) $ (376,387) -- $ --
===================================================================================================
</TABLE>
39
<PAGE>
<TABLE>
TOUCHSTONE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS CONTINUED
<CAPTION>
TOUCHSTONE VALUE PLUS FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding (Class A):
Shares sold 36,604 $ 404,433 2,605,472 $25,939,165
Reinvestment of dividends
and distributions 2,348 27,097 4,677 43,452
- ---------------------------------------------------------------------------------------------------
38,952 431,530 2,610,149 25,982,617
Shares redeemed (3,548) (38,530) (9,307) (2,366)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) 35,404 $ 393,000 2,600,842 $25,980,251
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class C):
Shares sold 36,434 $ 380,037 -- $ --
Reinvestment of dividends and distributions -- -- -- --
- ---------------------------------------------------------------------------------------------------
36,434 380,037 -- --
Shares redeemed (16,810) (173,098) -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) 19,624 $ 206,939 -- $ --
===================================================================================================
<CAPTION>
TOUCHSTONE GROWTH & INCOME FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding (Class A):
Shares sold 54,074 $ 866,309 840,694 $13,903,526
Reinvestment of dividends and distributions5,276 85,467 36,887 569,460
- ---------------------------------------------------------------------------------------------------
59,350 951,776 877,581 14,472,986
Shares redeemed (198,022) (3,190,102) (287,905) (4,676,332)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (138,672) $ (2,238,326) 589,676 $ 9,796,654
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class C):
Shares sold 25,124 $ 373,134 -- $ --
Reinvestment of dividends and distributions 289 4,130 -- --
- ---------------------------------------------------------------------------------------------------
25,413 377,264 -- --
Shares redeemed (57,664) (864,868) -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (32,251) $ (487,604) -- $ --
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class Y):
Shares sold -- $ -- -- $ --
Reinvestment of dividends and distributions5,733 126,390 -- --
- ---------------------------------------------------------------------------------------------------
5,733 126,390 -- --
Shares redeemed -- -- -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) 5,733 $ 126,390 -- $ --
===================================================================================================
</TABLE>
40
<PAGE>
<TABLE>
TOUCHSTONE SERIES TRUST
<CAPTION>
TOUCHSTONE BALANCED FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding (Class A):
Shares sold 23,895 $ 296,821 161,051 $ 2,065,886
Reinvestment of dividends
and distributions 3,343 41,821 23,854 286,919
- ---------------------------------------------------------------------------------------------------
27,238 338,642 184,905 2,352,805
Shares redeemed (65,821) (824,006) (68,591) (872,443)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (38,583) $ (485,364) 116,314 $ 1,480,362
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class C):
Shares sold 15,263 $183,982 -- $ --
Reinvestment of dividends
and distributions 1,067 12,791 -- --
- ---------------------------------------------------------------------------------------------------
16,330 196,773 -- --
Shares redeemed (54,526) (648,519) -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (38,196) $ (451,746) -- $ --
===================================================================================================
<CAPTION>
TOUCHSTONE BOND FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding (Class A):
Shares sold 31,532 $ 322,035 436,841 $ 4,527,950
Reinvestment of dividends
and distributions 12,768 129,382 26,120 271,637
- ---------------------------------------------------------------------------------------------------
44,300 451,417 462,961 4,799,587
Shares redeemed (92,504) (944,992) (153,703) (1,606,439)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (48,204) $(493,575) 309,258 $ 3,193,148
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class C):
Shares sold 19,920 $ 196,857 -- $ --
Reinvestment of dividends
and distributions 2,889 28,382 -- --
- ---------------------------------------------------------------------------------------------------
22,809 225,239 -- --
Shares redeemed (32,535) (321,242) -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (9,726) $ (96,003) -- $ --
- ---------------------------------------------------------------------------------------------------
Shares Outstanding (Class Y):
Shares sold -- $ -- -- $ --
Reinvestment of dividends
and distributions 27,657 382,286 -- --
- ---------------------------------------------------------------------------------------------------
27,657 382,286 -- --
Shares redeemed -- -- -- --
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) 27,657 $ 382,286 -- $ --
===================================================================================================
<CAPTION>
TOUCHSTONE STANDBY INCOME FUND
Six Months Ended Year Ended
June 30, 1999 (unaudited) December 31, 1998
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares Outstanding:
Shares sold 127,949 $ 1,276,531 846,688 $ 8,443,462
Reinvestment of dividends
and distributions 29,075 289,349 54,478 543,405
- ---------------------------------------------------------------------------------------------------
157,024 1,565,880 901,166 8,986,867
Shares redeemed (188,993) (1,882,002) (635,946) (6,343,864)
- ---------------------------------------------------------------------------------------------------
Net increase (decrease) (31,969) $ (316,122) 265,220 $ 2,643,003
===================================================================================================
</TABLE>
41
<PAGE>
TOUCHSTONE SERIES TRUST
SUPPLEMENTARY INFORMATION: CHANGE IN ACCOUNTANTS
For 1998 and for previous years, PricewaterhouseCoopers LLP and its predecessor
("PWC") served as independent public accountant for the Funds. Subsequent to
PWC's completion of the 1998 fiscal year audit the Board of Trustees asked
PricewaterhouseCoopers LLP to resign and selected Ernst & Young LLP as
independent public accountant for the Funds. The Board's selection of Ernst &
Young LLP did not result from any dispute between the Funds and PWC, and PWC's
reports for the last two years did not contain any adverse opinion or disclaimer
of opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principles. There was no disagreement between PWC and the Funds on
any matter of accounting principals, practices, financial statement disclosure
or auditing scope of procedure.
42
<PAGE>
NOTES
43
<PAGE>
NOTES
44
<PAGE>
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Touchstone Securities, Inc.
311 Pike Street
Cincinnati, Ohio 45202
800.638.8194 Broker-Dealers
800.285.2858 Financial Institutions
Investment Advisor of each Portfolio
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Touchstone Advisors, Inc.
311 Pike Street
Cincinnati, Ohio 45202
Transfer Agent
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State Street Bank and Trust Company
P.O. Box 8518
Boston, Massachusetts 02266-8518
Administrator, Custodian & Fund Accounting Agent
- ------------------------------------------------
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116-9130
Independent Accountants
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Ernst & Young LLP
1300 Chiquita Center
250 East Fifth Street
Cincinnati, Ohio 45202
Legal Counsel
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Frost & Jacobs LLP
2500 PNC Center
201 East Fifth Street
Cincinnati, Ohio 45202
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