TOUCHSTONE SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 100.0%
ADVERTISING - 3.1%
9,000 HA-LO Industries* $ 88,875
7,600 Snyder Communications* 248,900
- ----------------------------------------------------------
337,775
- ----------------------------------------------------------
APPAREL RETAILERS - 4.6%
6,700 bebe stores* 227,800
5,500 Buckle (The)* 158,125
10,000 Finish Line (The), Class A* 112,500
- ----------------------------------------------------------
498,425
- ----------------------------------------------------------
AUTOMOTIVE - 0.4%
2,000 Federal Signal 42,375
- ----------------------------------------------------------
BANKING - 0.9%
3,500 Eldorado Bancshares* 38,500
1,600 Greater Bay Bancorp 53,000
- ----------------------------------------------------------
91,500
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 1.9%
10,000 Hain Food Group (The)* 206,250
- ----------------------------------------------------------
BUILDING MATERIALS - 1.0%
3,000 Centex Construction Products 102,375
- ----------------------------------------------------------
COMMERCIAL SERVICES - 9.6%
8,000 Billing Concepts* 89,500
2,200 Consolidated Graphics* 110,000
9,000 Innotrac* 180,000
6,000 Metzler Group (The)* 165,750
8,000 Mobile Mini* 155,000
11,500 Modis Professional Services* 158,125
5,000 ONSALE* 94,688
5,800 Stewart Enterprises 84,463
- ----------------------------------------------------------
1,037,526
- ----------------------------------------------------------
COMMUNICATIONS - 6.3%
5,000 Excel Switching* 149,688
20,000 InterVoice* 288,742
11,000 Metro One Telecommunications* 151,250
7,900 PairGain Technologies* 90,850
- ----------------------------------------------------------
680,530
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 11.8%
27,000 Applix* 236,250
6,000 CIBER* 114,750
6,000 Complete Business Solutions* 107,625
4,500 Jack Henry & Associates 176,625
11,000 Mastech* 204,875
8,300 Mobius Management Systems* 68,475
10,900 Parametric Technology* 151,238
5,400 Visio* 205,538
- ----------------------------------------------------------
1,265,376
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 10.5%
1,300 Bell & Howell* 49,156
15,000 Box Hill Systems* 88,125
5,000 Cybex Computer Products* 139,375
5,500 Miami Computer Supply* 103,813
7,000 Saville Systems, ADR* 101,500
Value
Shares (Note 1)
COMPUTERS & INFORMATION - Continued
10,000 Silicon Graphics* $ 163,750
14,500 SMART Modular Technologies* 251,938
7,900 Xircom* 237,494
- ----------------------------------------------------------
1,135,151
- ----------------------------------------------------------
ELECTRONICS - 4.9%
10,000 Catapult Communications* 188,750
5,600 Craftmade International 71,400
11,500 Genesis Microchip* 271,688
- ----------------------------------------------------------
531,838
- ----------------------------------------------------------
ENTERTAINMENT & LEISURE - 0.9%
12,000 Family Golf Centers* 91,126
- ----------------------------------------------------------
FINANCIAL SERVICES - 7.3%
12,000 Actrade International* 153,750
22,000 FiNet.com* 122,375
5,000 Investment Technology Group 161,875
4,000 National Discount Brokers Group* 232,000
4,300 Waddell & Reed Financial, Class A 117,981
- ----------------------------------------------------------
787,981
- ----------------------------------------------------------
FOREST PRODUCTS & PAPER - 1.3%
20,700 Corporate Express* 144,254
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 1.3%
10,000 Orthodontic Centers of America* 141,250
- ----------------------------------------------------------
HEAVY CONSTRUCTION - 0.8%
2,800 Crossmann Communities* 80,850
- ----------------------------------------------------------
HEAVY MACHINERY - 2.1%
6,000 Knight Transportation* 126,000
4,000 Woodward Governor 104,000
- ----------------------------------------------------------
230,000
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 2.6%
4,800 Big Flower Holdings* 153,000
4,700 World Color Press* 129,250
- ----------------------------------------------------------
282,250
- ----------------------------------------------------------
MEDICAL SUPPLIES - 1.6%
8,000 Colorado MEDtech* 175,000
- ----------------------------------------------------------
OIL & GAS - 5.6%
5,700 Friede Goldman International* 79,088
9,000 Marine Drilling Companies* 123,188
12,100 Pride International* 127,806
4,200 Tidewater 128,100
5,000 WICOR 139,688
- ----------------------------------------------------------
597,870
- ----------------------------------------------------------
PHARMACEUTICALS - 7.4%
4,800 Barr Laboratories* 191,400
13,000 Guilford Pharmaceuticals* 165,750
4,500 Jones Pharma 177,188
9,300 Protein Design Labs* 206,344
5,000 Rexall Sundown* 60,625
- ----------------------------------------------------------
801,307
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
TOUCHSTONE SMALL CAP VALUE FUND
Schedule of Investments continued
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
RETAILERS - 5.0%
3,100 Action Performance Companies* $ 102,300
9,000 Borders Group* 142,313
11,500 Electronics Boutique Holdings* 163,875
7,000 Funco* 129,063
- ----------------------------------------------------------
537,551
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 4.8%
4,000 Commonwealth Telephone
Enterprises* 161,500
10,000 Hickory Tech 111,250
4,200 Pacific Gateway Exchange* 122,325
15,000 STAR Telecommunications* 117,188
- ----------------------------------------------------------
512,263
- ----------------------------------------------------------
TEXTILES, CLOTHING & FABRICS - 4.3%
6,000 Cutter & Buck* 99,750
10,000 Happy Kids* 86,250
7,900 Nautica Enterprises* 133,313
4,400 Tropical Sportswear
International* 140,250
- ----------------------------------------------------------
459,563
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $10,071,777) 10,770,386
- ----------------------------------------------------------
Value
(Note 1)
TOTAL INVESTMENTS AT VALUE - 100.0%
(COST $10,071,777)(A) $10,770,386
CASH AND OTHER ASSETS NET OF
LIABILITIES - 0.0% 3,880
- ----------------------------------------------------------
NET ASSETS - 100.0% $10,774,266
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$10,071,777, resulting in gross unrealized appreciation and depreciation of
$1,132,570 and $433,961, respectively, and net unrealized appreciation of
$698,609.
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
TOUCHSTONE EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 100.5%
AUTOMOTIVE - 1.7%
8,600 Bandag, Class A $ 241,875
21,500 Exide 317,125
- ----------------------------------------------------------
559,000
- ----------------------------------------------------------
BANKING - 3.0%
7,000 Bank United, Class A 281,313
17,600 Dime Bancorp 354,200
15,300 Golden State Bancorp* 336,600
- ----------------------------------------------------------
972,113
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 2.4%
41,300 DiMon 214,244
15,000 Ralcorp Holdings* 240,938
41,600 Vlasic Foods International* 304,200
- ----------------------------------------------------------
759,382
- ----------------------------------------------------------
BUILDING MATERIALS - 4.3%
33,500 Dal-Tile International* 381,063
6,000 Martin Marietta Materials 354,000
14,000 Sawtek* 642,250
- ----------------------------------------------------------
1,377,313
- ----------------------------------------------------------
COMMERCIAL SERVICES - 13.8%
17,200 Administaff* 275,200
27,000 Applied Analytical Industries* 303,750
13,000 A.C. Nielson* 393,250
15,000 Career Education* 507,188
10,200 CDI* 347,438
11,000 DeVry* 246,125
19,200 Education Management* 398,400
27,000 FirstService* 411,750
12,300 Forrester Research* 307,500
21,500 Safety-Kleen* 389,688
29,500 Unova* 468,313
15,800 Wallace Computer Services 395,000
- ----------------------------------------------------------
4,443,602
- ----------------------------------------------------------
COMMUNICATIONS - 4.8%
21,700 AudioCodes* 585,900
5,500 Plantronics* 358,188
19,000 Powerwave Technologies* 612,750
- ----------------------------------------------------------
1,556,838
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 4.3%
26,700 CBT Group, ADR* 440,550
46,600 Natural MicroSystems* 445,613
4,500 pcOrder.com* 187,031
10,700 Policy Management System* 321,000
- ----------------------------------------------------------
1,394,194
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 2.0%
14,600 Gerber Scientific 322,113
33,600 Scitex* 336,000
- ----------------------------------------------------------
658,113
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.0%
29,100 Magnetek* 307,369
- ----------------------------------------------------------
ELECTRONICS - 15.6%
30,000 Aeroflex* 592,500
4,500 Commscope* 138,375
8,500 Dionex* 344,250
13,000 Galileo Technology* 589,063
25,700 GP Strategies* 224,875
Value
Shares (Note 1)
ELECTRONICS - Continued
17,200 hi/fn* $ 1,309,342
25,000 MMC Networks* 1,118,750
34,600 Sipex* 709,300
- ----------------------------------------------------------
5,026,455
- ----------------------------------------------------------
ENTERTAINMENT & LEISURE - 3.1%
17,000 Cinar Films, Class B* 416,500
9,000 SFX Entertainment, Class A* 599,063
- ----------------------------------------------------------
1,015,563
- ----------------------------------------------------------
FOOD RETAILERS - 0.9%
18,900 Pantry (The)* 304,763
- ----------------------------------------------------------
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 2.5%
14,000 Syncor International* 504,000
19,600 Total Renal Care Holdings* 305,025
- ----------------------------------------------------------
809,025
- ----------------------------------------------------------
HEAVY CONSTRUCTION - 1.7%
38,000 Foster Wheeler 536,750
- ----------------------------------------------------------
HEAVY MACHINERY - 1.8%
24,100 Helix Technology 576,894
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 0.8%
5,800 Herman Miller 121,800
6,000 LA-Z-Boy Chair 138,000
- ----------------------------------------------------------
259,800
- ----------------------------------------------------------
HOUSEHOLD PRODUCTS - 0.8%
7,600 Snap-on 275,025
- ----------------------------------------------------------
INSURANCE - 2.6%
18,400 HCC Insurance Holdings 417,450
10,550 HSB Group 434,528
- ----------------------------------------------------------
851,978
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 7.8%
16,000 American Tower Systems,
Class A* 384,000
16,000 Capstar Broadcasting, Class A* 438,000
10,100 Central Newspapers, Class A 380,013
29,800 Hollinger International 353,875
34,200 Information Holdings* 671,175
9,400 Lee Enterprises 286,700
- ----------------------------------------------------------
2,513,763
- ----------------------------------------------------------
MEDICAL SUPPLIES - 6.5%
20,000 Arthocare* 410,000
8,200 EG&G 292,125
14,600 Novoste* 306,600
13,000 OEC Medical Systems* 318,500
11,700 Roper Industries 374,400
8,300 Xomed Surgical Products* 404,106
- ----------------------------------------------------------
2,105,731
- ----------------------------------------------------------
METALS - 1.7%
9,000 Harsco 288,000
11,600 Ryerson Tull 261,725
- ----------------------------------------------------------
549,725
- ----------------------------------------------------------
OIL & GAS - 3.4%
10,300 Equitable Resources 388,825
13,900 Helmerich & Payne 330,994
14,800 Nabors Industries* 361,675
- ----------------------------------------------------------
1,081,494
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
TOUCHSTONE EMERGING GROWTH FUND
Schedule of Investments continued
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
PHARMACEUTICALS - 4.2%
16,700 Albany Molecular Research* $ 496,825
14,000 Anesta* 286,125
8,800 King Pharmaceuticals* 227,700
10,000 Millennium Pharmaceuticals* 360,000
- ----------------------------------------------------------
1,370,650
- ----------------------------------------------------------
REAL ESTATE - 0.9%
11,800 Prentiss Properties Trust, REIT 277,300
- ----------------------------------------------------------
RETAILERS - 1.2%
16,300 Enesco Group 376,938
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 2.3%
8,100 Frontier 477,900
8,200 Qwest Communications
International* 271,113
- ----------------------------------------------------------
749,013
- ----------------------------------------------------------
TEXTILES, CLOTHING & FABRICS - 2.0%
12,347 Albany International* 256,200
24,400 Stride Rite 251,625
5,900 Unifi* 125,375
- ----------------------------------------------------------
633,200
- ----------------------------------------------------------
Value
Shares (Note 1)
TRANSPORTATION - 3.4%
37,200 Fritz Companies* $ 399,900
45,900 Halter Marine Group* 304,088
21,500 Yellow* 381,625
- ----------------------------------------------------------
1,085,613
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $27,946,526) 32,427,604
- ----------------------------------------------------------
Value
Units (Note 1)
WARRANTS - 0.0%
BANKING - 0.0%
5,700 Golden State Bancorp* 7,481
- ----------------------------------------------------------
TOTAL WARRANTS (COST $21,258) 7,481
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 100.5%
(COST $27,967,784)(A) 32,435,085
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS - (0.5)% (168,274)
- ----------------------------------------------------------
NET ASSETS - 100.0% $32,266,811
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$27,967,784, resulting in gross unrealized appreciation and depreciation of
$6,669,478 and $2,202,177, respectively, and net unrealized appreciation of
$4,467,301.
ADR - American Depository Receipt
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
TOUCHSTONE INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 94.6%
AUSTRALIA - 2.0%
20,720 Broken Hill Proprietary $ 240,023
7,202 Lend Lease 98,889
8,300 National Australia Bank 137,355
17,189 Publishing & Broadcasting 113,441
23,510 Southcorp 94,946
- ----------------------------------------------------------
684,654
- ----------------------------------------------------------
BRAZIL - 0.7%
6,379 Electrobras, ADR* 64,224
5,300 Petroleo Brasileiro, ADR 81,610
1,135 Telecomunicacoes Brasileiras
(Telebras), PFD Block, ADR 102,363
- ----------------------------------------------------------
248,197
- ----------------------------------------------------------
CHILE - 0.1%
1,100 Compania de Telecomunicaciones
de Chile, ADR 27,225
- ----------------------------------------------------------
CHINA - 0.2%
3,255 China Steel, 144A, ADR* 49,179
- ----------------------------------------------------------
FINLAND - 2.9%
7,483 Nokia Oyj 656,377
2,907 Sonera Group 63,597
8,495 UPM-Kymmene 243,706
- ----------------------------------------------------------
963,680
- ----------------------------------------------------------
FRANCE - 9.6%
1,694 Accor 425,668
3,068 AXA 374,540
2,135 Cap Gemini 335,770
2,981 Carrefour Supermarche* 438,365
1,725 Compagnie de Saint Gobain 275,028
6,143 Compagnie Generale des
Etablissements Michelin, Class B 251,479
1,569 Louis Vuitton Moet Hennessy 459,671
3,417 Total Fina, B 441,124
2,921 Valeo 241,146
- ----------------------------------------------------------
3,242,791
- ----------------------------------------------------------
GERMANY - 6.5%
706 Allianz Holdings 195,982
5,972 BASF 264,076
4,571 DaimlerChrysler 396,232
4,970 Mannesmann 742,136
6,487 Preussag* 348,771
3,097 Siemens 239,057
- ----------------------------------------------------------
2,186,254
- ----------------------------------------------------------
GREAT BRITAIN - 24.4%
12,653 Abbey National 237,499
13,556 Amvescap 120,601
1,044 Anglo American* 48,767
28,375 Bank of Scotland 375,640
39,139 British Petroleum 701,336
33,516 British Telecommunications 562,863
20,602 Cable & Wireless
Communications* 198,059
32,441 Cable & Wireless 413,188
15,521 CGU 220,639
Value
Shares (Note 1)
GREAT BRITAIN - Continued
7,306 COLT Telecom Group* $ 149,685
11,834 Compass Group 117,311
4,040 Energis* 96,333
46,183 General Electric 470,915
19,162 Glaxo Wellcome 532,414
28,530 Kingfisher 328,232
1,742 Liberty International* 11,530
31,213 Lloyds TSB Group 426,025
21,878 Nycomed Amersham 152,702
18,978 Orange* 281,683
17,153 Peninsular and Oriental
Steam Navigation 257,491
12,901 SEMA Group 124,381
75,238 Shell Transport & Trading 564,121
40,174 SmithKline Beecham 522,026
8,471 South African Breweries 73,527
11,187 Unilever 99,525
37,244 Vodafone Group 737,229
48,993 WPP Group 413,089
- ----------------------------------------------------------
8,236,811
- ----------------------------------------------------------
GREECE - 0.5%
8,920 Hellenic Telecommunications
Organization, ADR 98,678
4,934 National Bank of Greece, GDR* 63,402
- ----------------------------------------------------------
162,080
- ----------------------------------------------------------
HONG KONG - 1.0%
7,000 Cheung Kong Holdings 62,253
23,600 China Telecom* 65,550
6,211 Hang Seng Bank 69,446
8,300 Henderson Land Development 47,712
3,000 Hutchison Whampoa 27,163
12,500 Swire Pacific, Class A 61,867
- ----------------------------------------------------------
333,991
- ----------------------------------------------------------
IRELAND - 0.0%
1 Bank of Ireland 16
- ----------------------------------------------------------
ISRAEL - 0.1%
1,330 ECI Telecommunications 44,139
- ----------------------------------------------------------
ITALY - 3.6%
11,026 Assicurazione Generali 382,765
20,773 Istituto Bancario San
Paolo di Torino 283,522
175,123 Seat Pagine Gialle 238,548
29,512 Telecom Italia 306,224
- ----------------------------------------------------------
1,211,059
- ----------------------------------------------------------
JAPAN - 23.7%
2,200 Acom 189,984
2,800 Aiwa, First Section 92,554
1,000 Aruze 98,339
500 Avex 78,093
14,000 Bank of Tokyo 199,339
100 Bellsystem 24, Second Section 40,864
5,000 Bridgestone 151,227
4,000 Canon 115,032
11,000 Daiwa House Industry,
First Section 115,718
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
TOUCHSTONE INTERNATIONAL EQUITY FUND
Schedule of Investments continued
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
JAPAN - Continued
200 Don Quijote, Second Section $ 50,326
3,200 Familymart 146,765
2,300 Fanuc, First Section 123,544
18,000 Fuji Heavy Industries 138,931
1,690 Fuji Soft ABC, First Section 100,554
6,000 Fujitsu 120,734
2,000 Heiwa, First Section 36,030
300 Hikari Tsushin 92,720
2,000 Hoya, First Section 112,883
500 I-O Data Device 16,941
1,900 ITO Yokado 127,180
400 Kadokawa Shoten Publishing,
Second Section 81,646
4,000 Kao 112,387
1,600 Konami 66,110
1,606 Mabuchi Motor, First Section 149,306
7,000 Matsushita Electric 135,939
66 Merrill Lynch
(Honda Motor), CPS 71,644
8,000 Minebea 89,249
27,500 Mitsui Chemicals 177,258
22,000 Mitsui O.S.K. Lines, First Section 47,269
90 Morgan Stanley Dean Witter
(Canon Inc), CPS* 105,069
70 Morgan Stanley Dean Witter
(Sony Corp), CPS* 127,705
9,000 NEC 111,933
400 Nemic-Lambda K.K., First Section 29,419
1,801 Nichiei, First Section 157,761
500 NIDEC, First Section 74,994
2,500 Nintendo 348,112
23,000 Nippon Express 137,799
120 Nippon Telegraph & Telephone 699,116
17,000 Nomura Securities 199,066
300 Noritsu Koki, First Section 12,644
21 NTT Data, First Section 166,945
100 NTT Mobile Communication
Network, First Section 135,526
1,200 Orix, First Section 107,099
1,000 Rohm Company 156,599
200 Ryohin Keikaku, Second Section 50,326
1,300 Sankyo, First Section 62,201
13,000 Sanwa Bank (The) 127,948
12,000 Sekisui House 129,510
300 Shimamura, First Section 25,411
1,000 Softbank, First Section 202,545
2,200 Sony 237,253
13,000 Sumitomo Bank 161,251
25,000 Sumitomo Chemical, First Section 114,660
45,000 Sumitomo Realty & Development 168,829
6,000 Sumitomo Rubber Industries,
First Section 42,443
4,000 Takeda Chemical Industries 185,439
2,400 TDK 219,552
1,100 Tokyo Seimitsu, First Section 70,085
Value
Shares (Note 1)
JAPAN - Continued
18,000 Toshiba $ 128,370
11,000 Toyota Motor 348,153
600 WORLD, Second Section 44,575
3,000 Yakult Honsha, First Section 27,394
- ----------------------------------------------------------
7,994,298
- ----------------------------------------------------------
MEXICO - 1.1%
7,500 Cemex SA de CV, Class B, ADR 74,145
4,360 Cifra, ADR* 83,622
2,500 Telefonos de Mexico, Class L, ADR 202,031
- ----------------------------------------------------------
359,798
- ----------------------------------------------------------
NETHERLANDS - 6.8%
2,550 AEGON 185,124
5,042 Equant* 465,156
6,407 Fortis 198,021
3,662 Ing Groep 198,398
56 Koninklijke Numico 1,985
3,805 Koninklijke (Royal) Philips
Electronics 375,576
9,440 STMicroelectronics 632,912
1,350 STMicroelectronics, ADR 93,656
3,650 Verenigde Nederlandse 145,956
- ----------------------------------------------------------
2,296,784
- ----------------------------------------------------------
SINGAPORE - 0.7%
10,750 City Developments 68,845
34,620 DBS Land 69,159
11,900 Natsteel Electronics 52,089
4,400 Singapore Airlines 41,880
- ----------------------------------------------------------
231,973
- ----------------------------------------------------------
SOUTH AFRICA - 0.1%
3,737 Liberty Life Association of Africa 47,850
- ----------------------------------------------------------
SOUTH KOREA - 1.4%
10,000 Korea Electric Power, ADR 205,000
3,500 Korea Telecom, ADR* 140,000
1,946 Pohang Iron & Steel 65,434
272 Samsung Electronics, GDR* 14,634
3,400 SK Telecom, ADR 57,800
- ----------------------------------------------------------
482,868
- ----------------------------------------------------------
SPAIN - 1.0%
31,320 Banco Santander Central
Hispano* 326,439
- ----------------------------------------------------------
SWEDEN - 2.6%
14,639 Electrolux, Class B 307,208
7,495 Ericsson 240,791
17,052 Skandia Forsakrings 319,650
- ----------------------------------------------------------
867,649
- ----------------------------------------------------------
SWITZERLAND - 5.1%
2,334 ABB* 220,175
192 Novartis 280,644
64 Roche Holding 329,272
425 Swisscom 160,093
1,383 Union Bank of Switzerland 413,208
571 Zurich Allied 325,025
- ----------------------------------------------------------
1,728,417
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
TOUCHSTONE INTERNATIONAL EQUITY FUND
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
TAIWAN - 0.5%
5,360 Taiwan Semiconductor
Manufacturing, ADR* $ 182,240
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $29,144,564) 31,908,392
- ----------------------------------------------------------
INVESTMENT TRUST - 0.2%
TAIWAN - 0.2%
592 Morgan Stanley Taiwan OPALS,
Series B, 144A 80,736
- ----------------------------------------------------------
TOTAL INVESTMENT TRUST (COST $73,870) 80,736
- ----------------------------------------------------------
PREFERRED STOCK - 0.4%
GERMANY - 0.4%
301 SAP 120,364
- ----------------------------------------------------------
TOTAL PREFERRED STOCK (COST $115,218) 120,364
- ----------------------------------------------------------
Value
Shares (Note 1)
RIGHTS - 0.1%
FRANCE - 0.1%
1,569 Louis Vuitton Moet Hennessy* $ 45,902
- ----------------------------------------------------------
TOTAL RIGHTS (COST $0) 45,902
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 95.3%
(COST $29,333,652)(A) 32,155,394
CASH AND OTHER ASSETS
NET OF LIABILITIES - 4.7% 1,587,612
- ----------------------------------------------------------
NET ASSETS - 100.0% $33,743,006
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$29,333,652, resulting in gross unrealized appreciation and depreciation of
$4,006,628 and $1,184,886, respectively, and net unrealized appreciation of
$2,821,742.
144A - Securities restricted for resale to Qualified Institutional Buyers with
registration rights.
ADR - American Depository Receipt
CPS - Currency Protected Security
GDR - Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
TOUCHSTONE INCOME OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - 64.9%
AUTOMOTIVE - 2.4%
$ 750,000 Sonic Automotive,
Series B 11.00% 08/01/08 $ 742,500
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 4.1%
1,300,000 Mastellone Hermanos,
Yankee-Dollar 11.75% 04/01/08 923,000
400,000 Richmont Marketing
Special, 144A 10.125% 12/15/07 336,000
- ----------------------------------------------------------
1,259,000
- ----------------------------------------------------------
CHEMICALS - 7.1%
750,000 Lyondell Chemical,
Series B, 144A 9.875% 05/01/07 766,875
700,000 Royster-Clark,
144A 10.25% 04/01/09 689,500
750,000 ZSC Specialty
Chemicals, 144A 11.00% 07/01/09 755,625
- ----------------------------------------------------------
2,212,000
- ----------------------------------------------------------
COMMERCIAL SERVICES - 4.8%
750,000 Avis Rent A Car,
144A 11.00% 05/01/09 758,438
500,000 Dialog, Series A,
Yankee-Dollar 11.00% 11/15/07 452,500
500,000 Eagle Geophysical,
Series B @ 10.75% 07/15/08 260,000
- ----------------------------------------------------------
1,470,938
- ----------------------------------------------------------
COMMUNICATIONS - 6.6%
750,000 Netia Holdings,
144A 13.125% 06/15/09 755,625
450,000 Northeast Optic
Network 12.75% 08/15/08 465,750
650,000 Orion Network 11.25% 01/15/07 581,750
600,000 Paging Network
do Brasil,
Euro-Dollar (c) 13.50% 06/06/05 252,000
- ----------------------------------------------------------
2,055,125
- ----------------------------------------------------------
CONTAINERS & PACKAGING - 0.8%
250,000 Consolidated
Container, 144A 10.125% 07/15/09 253,750
- ----------------------------------------------------------
ELECTRIC UTILITIES - 4.8%
750,000 AES Corporation
(The) 9.50% 06/01/09 770,625
750,000 Calpine 7.75% 04/15/09 703,125
- ----------------------------------------------------------
1,473,750
- ----------------------------------------------------------
ELECTRONICS - 1.2%
500,000 Pacific Aerospace
& Electronics 11.25% 08/01/05 375,000
- ----------------------------------------------------------
ENTERTAINMENT & LEISURE - 3.6%
450,000 Bell Sports,
Series B 11.00% 08/15/08 447,750
500,000 Derby Cycle
Corporation (The)10.00% 05/15/08 405,000
500,000 TVN Entertainment,
144A (c) 14.00% 08/01/08 275,000
- ----------------------------------------------------------
1,127,750
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
HEALTH CARE PROVIDERS - 1.6%
$ 500,000 LifePoint Hospitals,
144A 10.75% 05/15/09 $ 508,750
- ----------------------------------------------------------
HEAVY MACHINERY - 1.5%
500,000 Tokheim, 144A 11.375% 08/01/08 477,500
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 1.8%
750,000 Imperial Home Decor
Group, Series B 11.00% 03/15/08 562,500
- ----------------------------------------------------------
INDUSTRIAL - DIVERSIFIED - 10.2%
450,000 Aqua Chem 11.25% 07/01/08 315,000
450,000 Evenflo, Series B11.75% 08/15/06 454,500
500,000 FSW International,
Yankee-Dollar#+ 12.50% 11/01/06 125,000
700,000 Generac Portable
Products, 144A 11.25% 07/01/06 764,750
880,000 Pen-Tab
Industries 10.875% 02/01/07 748,000
750,000 Pentacon,
Series B 12.25% 04/01/09 738,750
- ----------------------------------------------------------
3,146,000
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 4.2%
1,000,000 Innova S. de R.L.,
Yankee-Dollar 12.875% 04/01/07 805,000
600,000 Source Media 12.00% 11/01/04 480,000
- ----------------------------------------------------------
1,285,000
- ----------------------------------------------------------
METALS - 0.9%
500,000 Nippon Denro
Ispat 3.00% 04/01/01 130,000
1,000,000 NTS Steel Group,
Euro-Dollar#+ 4.00% 12/16/08 150,000
- ----------------------------------------------------------
280,000
- ----------------------------------------------------------
OIL & GAS - 3.9%
300,000 Panaco 10.625% 10/01/04 195,000
500,000 Pride
International 10.00% 06/01/09 507,500
500,000 Western Gas
Resources, 144A 10.00% 06/15/09 509,375
- ----------------------------------------------------------
1,211,875
- ----------------------------------------------------------
RETAILERS - 1.7%
500,000 Big 5 10.875% 11/15/07 510,000
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 2.5%
750,000 NEXTLINK
Communications 10.75% 06/01/09 768,750
- ----------------------------------------------------------
TRANSPORTATION - 1.2%
500,000 Stena Line 10.625% 06/01/08 377,500
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $23,126,278) 20,097,688
- ----------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 34.1%
ARGENTINA - 1.9%
697,500 Republic of
Argentina(b) 5.938% 03/31/05 597,409
- ----------------------------------------------------------
BRAZIL - 5.6%
1,200,000 Republic
of Brazil 11.625% 04/15/04 1,113,000
1,000,000 Republic of Brazil,
Brady Bond(b) 5.875% 04/15/24 618,750
- ----------------------------------------------------------
1,731,750
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
TOUCHSTONE INCOME OPPORTUNITY FUND
Principal Interest Maturity Value
Amount Rate Date (Note 1)
SOVEREIGN GOVERNMENT OBLIGATIONS - Continued
BULGARIA - 4.5%
$1,000,000 Government of
Bulgaria, Brady
Bond(b) 5.875% 07/28/24 $ 677,500
1,050,000 Government of
Bulgaria, Brady
Bond, IAB(b) 5.875% 07/28/11 711,375
- ----------------------------------------------------------
1,388,875
- ----------------------------------------------------------
COLOMBIA - 2.0%
750,000 Republic of
Colombia 9.75% 04/23/09 615,000
- ----------------------------------------------------------
MEXICO - 5.7%
1,750,000 United Mexican
States 10.375% 02/17/09 1,756,561
- ----------------------------------------------------------
NIGERIA - 1.5%
750,000 Central Bank of
Nigeria, Series WW,
Brady Bond(b)(c) 6.25% 11/15/20 460,313
- ----------------------------------------------------------
PERU - 1.8%
1,000,000 Republic of Peru,
Brady Bond,
FLIRB(b) 3.75% 03/07/17 543,750
- ----------------------------------------------------------
PHILIPPINE ISLANDS - 2.5%
800,000 Republic of
Philippines 9.875% 01/15/19 783,000
- ----------------------------------------------------------
RUSSIA - 1.3%
800,000 Russian Federation8.75% 07/24/05 397,000
- ----------------------------------------------------------
TURKEY - 2.3%
750,000 Republic of
Turkey 12.375% 06/15/09 728,438
- ----------------------------------------------------------
VENEZUELA - 5.0%
2,023,800 Republic of
Venezuela, Series
DL, Brady Bond,
DCB(b) 6.313% 12/18/07 1,538,088
- ----------------------------------------------------------
TOTAL SOVEREIGN GOVERNMENT
OBLIGATIONS (COST $10,733,685) 10,540,184
- ----------------------------------------------------------
Value
Units (Note 1)
WARRANTS - 0.0%
10,125 Conecel Holdings * --
400 Loral Space & Communications * $ 4,200
300 Primus Telecommunications* 6,000
- ----------------------------------------------------------
TOTAL WARRANTS (COST $0) 10,200
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 99.0%
(COST $33,859,963)(A) 30,648,072
CASH AND OTHER ASSETS
NET OF LIABILITIES - 1.0% 286,032
- ----------------------------------------------------------
NET ASSETS - 100.0% $30,934,104
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
# Security currently in default of interest payment. The Fund is not accruing
stated interest.
+ Restricted and Board valued security (Note 6).
@ Security defaulted on interest payment which was due subsequent to period
end. All income receivable related to this
security has been written off as of June 30, 1999.
(a) The aggregate identified cost for federal income tax purposes is
$33,859,963, resulting in gross unrealized appreciation and depreciation of
$510,914 and $3,722,805 respectively, and net unrealized depreciation of
$3,211,891.
(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.
FLIRB - Front-Load Interest Reduction Bonds
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.
21
<PAGE>
TOUCHSTONE HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - 95.3%
AUTOMOTIVE - 4.7%
$500,000 Accuride, Series B9.25% 02/01/08 $ 495,000
250,000 Federal-Mogul,
144A 7.375% 01/15/06 235,409
- ----------------------------------------------------------
730,409
- ----------------------------------------------------------
CHEMICALS - 6.6%
500,000 Lyondell Chemical,
Series B, 144A 9.875% 05/01/07 511,250
500,000 ZSC Specialty
Chemicals, 144A 11.00% 07/01/09 500,000
- ----------------------------------------------------------
1,011,250
- ----------------------------------------------------------
COMMERCIAL SERVICES - 6.1%
500,000 Rural/Metro 7.875% 03/15/08 452,500
500,000 United Rentals,
Series B 8.80% 08/15/08 485,000
- ----------------------------------------------------------
937,500
- ----------------------------------------------------------
COMMUNICATIONS - 1.9%
500,000 Pinnacle
Holdings(b) 0.00% 03/15/08 286,250
- ----------------------------------------------------------
COSMETICS & PERSONAL CARE - 3.0%
500,000 Revlon Consumer
Products 8.625% 02/01/08 467,500
- ----------------------------------------------------------
ELECTRIC UTILITIES - 3.1%
500,000 AES 8.50% 11/01/07 471,250
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.2%
500,000 Integrated Electrical
Services, Series B9.375%02/01/09 492,500
- ----------------------------------------------------------
ENTERTAINMENT & LEISURE - 3.1%
500,000 Carmike Cinemas,
144A 9.375% 02/01/09 483,750
- ----------------------------------------------------------
FINANCIAL SERVICES - 2.5%
500,000 ContiFinancial 8.125% 04/01/08 378,292
- ----------------------------------------------------------
FOOD RETAILERS - 3.2%
500,000 Marsh Supermarkets,
Series B 8.875% 08/01/07 495,000
- ----------------------------------------------------------
FOREST PRODUCTS & PAPER - 9.7%
500,000 Delta Mills,
Series B 9.625% 09/01/07 480,000
500,000 Republic Group 9.50% 07/15/08 492,500
500,000 Tembec Finance,
Yankee-Dollar 9.875% 09/30/05 521,874
- ----------------------------------------------------------
1,494,374
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 7.1%
200,000 Columbia/HCA
Healthcare 7.00% 07/01/07 179,368
500,000 Genesis Health
Ventures 9.25% 10/01/06 400,000
500,000 LifePoint Hospitals,
144A 10.75% 05/15/09 508,750
- ----------------------------------------------------------
1,088,118
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
HOUSING - 3.1%
$ 500,000 Champion Enterprises,
144A 7.625% 05/15/09 $ 481,607
- ----------------------------------------------------------
INSURANCE - 3.1%
500,000 Willis Corroon,
144A 9.00% 02/01/09 481,875
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 9.8%
500,000 American Lawyer
Media, Series B 9.75% 12/15/07 510,000
500,000 Chancellor Media 9.00% 10/01/08 508,750
500,000 Susquehanna
Media, 144A 8.50% 05/15/09 492,500
- ----------------------------------------------------------
1,511,250
- ----------------------------------------------------------
METALS - 6.2%
500,000 Algoma Steel 12.375% 07/15/05 490,000
500,000 LTV Corporation
(The) 8.20% 09/15/07 467,500
- ----------------------------------------------------------
957,500
- ----------------------------------------------------------
OIL & GAS - 6.6%
500,000 HS Resources 9.25% 11/15/06 495,000
500,000 RBF Finance,
144A 11.00% 03/15/06 515,000
- ----------------------------------------------------------
1,010,000
- ----------------------------------------------------------
RESTAURANTS - 3.1%
500,000 Advantica Restaurant
Group 11.25% 01/15/08 481,250
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 3.8%
500,000 Paging Network 8.875% 02/01/06 360,000
250,000 Sprint Capital 6.875% 11/15/28 227,633
- ----------------------------------------------------------
587,633
- ----------------------------------------------------------
TEXTILES, CLOTHING & FABRICS - 2.1%
500,000 Galey & Lord 9.125% 03/01/08 327,500
- ----------------------------------------------------------
TRANSPORTATION - 3.3%
500,000 American Commercial
Lines, Series B 10.25% 06/30/08 500,000
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $15,153,345) 14,674,808
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 95.3%
(COST $15,153,345)(A) 14,674,808
CASH AND OTHER ASSETS
NET OF LIABILITIES - 4.7% 720,758
- ----------------------------------------------------------
NET ASSETS - 100.0% $15,395,566
==========================================================
Notes to the Schedule of Investments:
(a) The aggregate identified cost for federal income tax purposes is
$15,153,345, resulting in gross unrealized appreciation and depreciation of
$42,365 and $520,902, respectively, and net unrealized depreciation of
$478,537.
(b) Step coupon bond, zero coupon until 03/15/2003, 10.00% thereafter.
144A - Securities restricted for resale to Qualified Institutional Buyers with
registration rights. 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.
22
<PAGE>
TOUCHSTONE VALUE PLUS FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 96.9%
AEROSPACE & DEFENSE - 1.7%
2,250 Allied Signal $ 141,750
- ----------------------------------------------------------
AUTOMOTIVE - 2.4%
3,675 Magna International, Class A 208,556
- ----------------------------------------------------------
BANKING - 5.7%
3,257 Bank One 193,995
4,775 First American 198,461
4,500 North Fork Bancorporation 95,906
- ----------------------------------------------------------
488,362
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 3.9%
5,900 Pepsico 228,256
3,500 Sysco 104,344
- ----------------------------------------------------------
332,600
- ----------------------------------------------------------
CHEMICALS - 1.2%
1,550 Du Pont (E.I.) De Nemours 105,884
- ----------------------------------------------------------
COMMERCIAL SERVICES - 1.6%
9,375 Stewart Enterprises 136,523
- ----------------------------------------------------------
COMMUNICATIONS - 3.8%
3,725 Nortel Networks 323,372
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 2.3%
4,250 Ceridian* 138,922
1,150 First Data 56,278
- ----------------------------------------------------------
195,200
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 3.0%
3,725 Sun Microsystems* 256,559
- ----------------------------------------------------------
ELECTRIC UTILITIES - 1.4%
2,825 CMS Energy 118,297
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.8%
1,450 Thomas & Betts 68,513
- ----------------------------------------------------------
ELECTRONICS - 4.6%
2,375 Intel 141,313
3,000 Micron Technology* 120,938
2,250 Xilinx* 128,813
- ----------------------------------------------------------
391,064
- ----------------------------------------------------------
FINANCIAL SERVICES - 6.9%
4,287 Citigroup 203,633
2,400 Federal National Mortgage
Association 164,100
900 Morgan Stanley Dean Witter 92,250
2,800 SLM Holding 128,275
- ----------------------------------------------------------
588,258
- ----------------------------------------------------------
FOOD RETAILERS - 2.3%
3,827 Albertson's 197,330
- ----------------------------------------------------------
FOREST PRODUCTS & PAPER - 5.1%
3,500 Kimberly-Clark 199,500
4,150 Mead 173,263
2,550 Tenneco 60,881
- ----------------------------------------------------------
433,644
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 2.5%
4,675 HCR Manor Care* 113,077
6,825 Healthsouth* 101,948
- ----------------------------------------------------------
215,025
- ----------------------------------------------------------
HEAVY MACHINERY - 1.8%
2,100 Applied Materials* 155,138
- ----------------------------------------------------------
Value
Shares (Note 1)
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 3.1%
1,575 General Electric $ 177,975
1,975 Newell Rubbermaid 91,838
- ----------------------------------------------------------
269,813
- ----------------------------------------------------------
INSURANCE - 6.2%
1,350 Aetna 120,741
2,750 Equitable Companies 184,250
1,550 Ohio Casualty 55,994
3,975 Reliastar Financial 173,906
- ----------------------------------------------------------
534,891
- ----------------------------------------------------------
MEDICAL SUPPLIES - 1.4%
4,000 Becton Dickinson & Company 120,000
- ----------------------------------------------------------
OFFICE EQUIPMENT - 3.1%
4,525 Xerox 267,258
- ----------------------------------------------------------
OIL & GAS - 9.2%
1,800 Chevron 171,338
4,075 Conoco, Class A 113,591
2,275 Mobil 225,225
1,275 Schlumberger 81,202
4,575 Williams Companies (The) 194,723
- ----------------------------------------------------------
786,079
- ----------------------------------------------------------
PHARMACEUTICALS - 4.8%
1,975 Abbott Laboratories 89,863
2,750 Amgen* 167,406
2,025 Merck 149,850
- ----------------------------------------------------------
407,119
- ----------------------------------------------------------
RETAILERS - 3.9%
2,375 Consolidated Stores* 64,125
2,450 Federated Department Stores* 129,697
6,325 Office Depot* 139,545
- ----------------------------------------------------------
333,367
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 11.7%
3,150 Alltel 225,225
2,225 Bell Atlantic 145,459
4,175 Frontier 246,325
2,225 MCI Worldcom* 191,489
3,400 SBC Communications 197,200
- ----------------------------------------------------------
1,005,698
- ----------------------------------------------------------
TRANSPORTATION - 2.5%
1,500 Trinity Industries 50,250
2,050 US Freightways 94,941
3,700 Wisconsin Central Transport* 69,838
- ----------------------------------------------------------
215,029
- ----------------------------------------------------------
TOTAL COMMON STOCKS (COST $7,436,130) 8,295,329
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 96.9%
(COST $7,436,130)(A) 8,295,329
- ----------------------------------------------------------
CASH AND OTHER ASSETS
NET OF LIABILITIES - 3.1% 267,365
NET ASSETS - 100.0% $ 8,562,694
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$7,436,130, resulting in gross unrealized appreciation and depreciation of
$977,437 and $118,238, respectively, and net unrealized appreciation of
$859,199.
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
TOUCHSTONE GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 98.1%
AEROSPACE & DEFENSE - 3.8%
39,700 Lockheed Martin $ 1,478,825
10,500 Northrop Grumman 696,281
13,900 Rockwell International 844,425
- ----------------------------------------------------------
3,019,531
- ----------------------------------------------------------
AUTOMOTIVE - 3.6%
33,000 Ford Motor 1,862,438
15,966 Meritor Automotive 407,133
11,700 Paccar 624,488
- ----------------------------------------------------------
2,894,059
- ----------------------------------------------------------
BANKING - 9.0%
29,300 Bank of America 2,148,056
15,824 Bank One 942,517
19,100 Chase Manhattan 1,654,538
17,946 First Union 843,462
23,300 Fleet Financial Group 1,033,938
16,200 US Bancorp 550,800
- ----------------------------------------------------------
7,173,311
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 3.4%
20,500 Heinz (H. J.) 1,027,563
22,600 Pepsico 874,338
20,400 Philip Morris 819,825
- ----------------------------------------------------------
2,721,726
- ----------------------------------------------------------
CHEMICALS - 5.2%
16,700 Akzo, ADR 707,663
7,300 Dow Chemical 926,188
20,000 Du Pont (E.I.) De Nemours 1,366,250
54,600 Lyondell Petro Chemical 1,126,125
- ----------------------------------------------------------
4,126,226
- ----------------------------------------------------------
COMMERCIAL SERVICES - 2.1%
47,100 Pacificorp 865,463
20,700 Unicom 798,244
- ----------------------------------------------------------
1,663,707
- ----------------------------------------------------------
COSMETICS & PERSONAL CARE - 4.0%
34,000 Avon Products 1,887,000
12,900 Colgate-Palmolive 1,273,875
- ----------------------------------------------------------
3,160,875
- ----------------------------------------------------------
ELECTRIC UTILITIES - 0.5%
13,500 Cinergy 432,000
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.7%
8,600 Emerson Electric 540,725
- ----------------------------------------------------------
FINANCIAL SERVICES - 2.3%
21,300 Federal National Mortgage
Association 1,456,388
3,000 J.P. Morgan 421,500
- ----------------------------------------------------------
1,877,888
- ----------------------------------------------------------
FOOD RETAILERS - 0.2%
2,726 Albertson's 140,559
- ----------------------------------------------------------
Value
Shares (Note 1)
FOREST PRODUCTS & PAPER - 4.8%
24,900 Georgia-Pacific $ 1,179,638
13,900 Georgia-Pacific (Timber Group) 350,975
11,000 Temple-Inland 750,750
22,500 Weyerhauser 1,546,875
- ----------------------------------------------------------
3,828,238
- ----------------------------------------------------------
HEAVY MACHINERY - 1.8%
5,500 Caterpillar 330,000
24,900 Parker Hannifin 1,139,175
- ----------------------------------------------------------
1,469,175
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 1.1%
7,900 General Electric 892,700
- ----------------------------------------------------------
HOUSEHOLD PRODUCTS - 4.8%
54,900 Corning 3,849,853
- ----------------------------------------------------------
INSURANCE - 4.4%
10,400 Lincoln National 544,050
5,900 Marsh & McLennan Companies 445,450
31,900 St. Paul Companies (The) 1,014,819
26,231 XL Capital, Class A 1,482,052
- ----------------------------------------------------------
3,486,371
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 0.5%
7,600 McGraw-Hill Companies (The) 409,925
- ----------------------------------------------------------
METALS - 2.3%
43,700 Allegheny Teledyne 988,713
38,100 Oregon Steel Mills 507,206
3,600 Phelps Dodge 222,975
2,300 Reynolds Metals 135,700
- ----------------------------------------------------------
1,854,594
- ----------------------------------------------------------
OFFICE EQUIPMENT - 3.7%
50,200 Xerox 2,964,938
- ----------------------------------------------------------
OIL & GAS - 9.2%
8,288 BP Amoco, ADR 899,248
26,600 Conoco, Class A 741,475
12,700 Elf Aquitaine, ADR 934,244
8,500 Mobil 841,500
14,200 Royal Dutch Petroleum 855,550
18,700 Texaco 1,168,750
13,700 Total Fina, ADR* 882,794
24,800 Williams Companies (The) 1,055,550
- ----------------------------------------------------------
7,379,111
- ----------------------------------------------------------
PHARMACEUTICALS - 6.6%
41,900 American Home Products 2,409,250
17,100 Bristol-Myers Squibb 1,204,481
12,700 Glaxo Wellcome, ADR 719,138
13,800 Smithkline Beecham, ADR 911,663
- ----------------------------------------------------------
5,244,532
- ----------------------------------------------------------
REAL ESTATE - 0.6%
13,200 Boston Properties, REIT 473,550
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
TOUCHSTONE GROWTH & INCOME FUND
Value
Shares (Note 1)
COMMON STOCKS - CONTINUED
RETAILERS - 1.5%
49,100 Rite Aid $ 1,209,088
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 17.6%
19,300 Alltel 1,379,950
11,400 Ameritech 837,900
44,000 Bell Atlantic 2,876,500
34,800 Bellsouth 1,631,250
25,900 Frontier 1,528,100
25,900 GTE 1,961,925
28,800 SBC Communications 1,670,400
29,400 Sprint 1,552,688
25,800 Telesp Participacoes, ADR 590,175
- ----------------------------------------------------------
14,028,888
- ----------------------------------------------------------
TRANSPORTATION - 4.4%
11,200 Canadian National Railway 750,400
26,000 Canadian Pacific 619,125
34,600 CSX 1,567,813
18,800 Norfolk Southern 566,350
- ----------------------------------------------------------
3,503,688
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $67,188,794) 78,345,258
- ----------------------------------------------------------
Value
Shares (Note 1)
CONVERTIBLE PREFERRED STOCKS - 0.6%
CHEMICALS - 0.6%
11,400 Monsanto, ACES $ 457,425
- ----------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $471,268) 457,425
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 98.7%
(COST $67,660,062)(A) 78,802,683
CASH AND OTHER ASSETS
NET OF LIABILITIES - 1.3% 1,001,444
- ----------------------------------------------------------
NET ASSETS - 100.0% $79,804,127
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$67,660,062, resulting in gross unrealized appreciation and depreciation of
$13,318,612 and $2,175,991, respectively, and net unrealized appreciation
of $11,142,621.
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.
25
<PAGE>
TOUCHSTONE ENHANCED 30 FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 95.0%
AEROSPACE & DEFENSE - 6.3%
5,400 Allied Signal $ 340,200
7,700 Boeing 340,244
- ----------------------------------------------------------
680,444
- ----------------------------------------------------------
BANKING - 3.2%
4,600 Bank of America 337,238
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 9.5%
4,800 Coca-Cola 300,000
8,500 McDonald's 351,156
9,200 Philip Morris 369,725
- ----------------------------------------------------------
1,020,881
- ----------------------------------------------------------
CHEMICALS - 2.9%
4,600 Du Pont (E.I.) De Nemours 314,238
- ----------------------------------------------------------
COMMUNICATIONS - 3.7%
5,900 Lucent Technologies 397,881
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 3.5%
4,100 Microsoft 369,769
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 10.8%
5,800 Cisco Systems* 374,100
4,000 Hewlett-Packard 401,998
3,000 International Business Machines 387,750
- ----------------------------------------------------------
1,163,848
- ----------------------------------------------------------
COSMETICS & PERSONAL CARE - 2.9%
3,500 Proctor & Gamble 312,375
- ----------------------------------------------------------
ELECTRONICS - 2.9%
5,300 Intel 315,350
- ----------------------------------------------------------
ENTERTAINMENT & LEISURE - 2.9%
10,000 Walt Disney Company (The) 308,125
- ----------------------------------------------------------
FINANCIAL SERVICES - 9.1%
2,500 American Express 325,313
6,600 Citigroup 313,500
2,400 J.P. Morgan 337,200
- ----------------------------------------------------------
976,013
- ----------------------------------------------------------
Value
Shares (Note 1)
HEAVY MACHINERY - 6.5%
5,700 Caterpillar $ 342,000
4,900 United Technologies 351,269
- ----------------------------------------------------------
693,269
- ----------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 3.4%
3,200 General Electric 361,600
- ----------------------------------------------------------
INDUSTRIAL - DIVERSIFIED - 2.8%
3,500 Minnesota Mining &
Manufacturing (3M) 304,281
- ----------------------------------------------------------
MEDICAL SUPPLIES - 3.1%
3,400 Johnson & Johnson 333,200
- ----------------------------------------------------------
OIL & GAS - 6.3%
3,600 Chevron 342,675
3,400 Mobil 336,600
- ----------------------------------------------------------
679,275
- ----------------------------------------------------------
PHARMACEUTICALS - 9.2%
6,900 Abbott Laboratories 313,950
4,700 Merck 347,800
3,000 Pfizer 329,250
- ----------------------------------------------------------
991,000
- ----------------------------------------------------------
RETAILERS - 6.0%
6,700 Sears Roebuck 298,569
7,200 Wal-Mart Stores 347,400
- ----------------------------------------------------------
645,969
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $10,040,229) 10,204,756
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 95.0%
(COST $10,040,229)(A) 10,204,756
CASH AND OTHER ASSETS
NET OF LIABILITIES - 5.0% 541,504
- ----------------------------------------------------------
NET ASSETS - 100.0% $10,746,260
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$10,040,229, resulting in gross unrealized appreciation and depreciation of
$421,295 and $256,768, respectively, and net unrealized appreciation of
$164,527.
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
TOUCHSTONE BALANCED FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Value
Shares (Note 1)
COMMON STOCKS - 55.7%
ADVERTISING - 2.6%
4,000 Lamar Advertising* $ 163,750
6,900 WPP Group 591,675
7,000 Young & Rubicam 318,063
- ----------------------------------------------------------
1,073,488
- ----------------------------------------------------------
AEROSPACE & DEFENSE - 1.8%
10,000 Boeing 441,875
4,700 Rockwell International 285,525
- ----------------------------------------------------------
727,400
- ----------------------------------------------------------
AIRLINES - 1.2%
7,200 AMR* 491,400
- ----------------------------------------------------------
BANKING - 3.6%
6,000 BankBoston 306,750
9,000 Household International 426,375
17,300 Wells Fargo 739,575
- ----------------------------------------------------------
1,472,700
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 2.5%
11,216 Diageo, ADR 482,288
13,000 McDonald's 537,063
- ----------------------------------------------------------
1,019,351
- ----------------------------------------------------------
CHEMICALS - 2.4%
6,500 Du Pont (E.I.) De Nemours 444,031
14,400 Monsanto 567,900
- ----------------------------------------------------------
1,011,931
- ----------------------------------------------------------
COMMERCIAL SERVICES - 1.3%
10,000 Waste Management 537,500
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 4.1%
42,100 Cadence Design Systems* 536,775
16,800 Computer Associates
International 924,000
5,000 First Data 244,688
- ----------------------------------------------------------
1,705,463
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 1.9%
21,900 Compaq Computer 518,756
6,000 Jabil Circuit* 270,750
- ----------------------------------------------------------
789,506
- ----------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.8%
5,500 Emerson Electric 345,813
- ----------------------------------------------------------
ELECTRONICS - 3.9%
10,000 Arrow Electronics* 190,000
6,500 Avnet 302,250
4,400 Flextronics International* 244,200
3,300 Motorola 312,675
7,000 Oak Industries* 305,813
3,500 Raytheon, Class B 246,313
- ----------------------------------------------------------
1,601,251
- ----------------------------------------------------------
FINANCIAL SERVICES - 4.2%
17,500 Citigroup 831,250
9,800 Countrywide Credit 418,950
8,300 Federal Home Loan Mortgage
Corporation 481,400
- ----------------------------------------------------------
1,731,600
- ----------------------------------------------------------
Value
Shares (Note 1)
HEAVY MACHINERY - 1.9%
8,000 Caterpillar $ 480,000
9,000 Dover 315,000
- ----------------------------------------------------------
795,000
- ----------------------------------------------------------
INDUSTRIAL - DIVERSIFIED - 2.1%
4,000 Carlisle Companies 192,500
8,000 Minnesota Mining &
Manufacturing 695,500
- ----------------------------------------------------------
888,000
- ----------------------------------------------------------
INSURANCE - 3.8%
10,000 Ace Limited 282,500
6,000 AFLAC 287,250
8,729 Conseco 265,689
9,000 Everest Reinsurance Holdings 293,625
4,000 PartnerRe 149,500
5,500 XL Capital, Class A 310,750
- ----------------------------------------------------------
1,589,314
- ----------------------------------------------------------
LODGING - 1.1%
193,200 Homestead Village* 470,925
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 3.3%
13,000 Chancellor Media* 716,625
8,300 Emmis Communications,
Class A* 409,813
11,000 Gartner Group, Class A* 225,500
- ----------------------------------------------------------
1,351,938
- ----------------------------------------------------------
MEDICAL SUPPLIES - 1.0%
5,000 Becton Dickinson & Company 150,000
7,000 EG&G 249,375
- ----------------------------------------------------------
399,375
- ----------------------------------------------------------
METALS - 2.3%
5,500 Alcoa 340,313
11,900 Allegheny Teledyne 269,238
11,000 Crane 345,813
- ----------------------------------------------------------
955,364
- ----------------------------------------------------------
OIL & GAS - 0.5%
5,400 Anadarko Petroleum 198,788
- ----------------------------------------------------------
PHARMACEUTICALS - 1.8%
8,000 American Home Products 460,000
6,200 Teva Pharmaceutical Industries,
ADR 303,800
- ----------------------------------------------------------
763,800
- ----------------------------------------------------------
REAL ESTATE - 1.6%
17,500 Prologis Trust, REIT 354,375
22,400 Security Capital Group, Class B* 326,200
- ----------------------------------------------------------
680,575
- ----------------------------------------------------------
RETAILERS - 0.7%
7,000 May Department Stores 286,125
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 1.8%
3,500 MCI Worldcom* 301,875
8,000 Sprint 422,500
- ----------------------------------------------------------
724,375
- ----------------------------------------------------------
TEXTILES, CLOTHING & FABRICS - 0.4%
10,200 Shaw Industries* 168,300
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
TOUCHSTONE BALANCED FUND
Schedule of Investments continued
Value
Shares (Note 1)
COMMON STOCKS - Continued
TRANSPORTATION - 3.1%
18,500 Air Express International $ 469,438
12,000 Canadian Pacific 285,750
7,800 Sabre Group Holdings* 536,250
- ----------------------------------------------------------
1,291,438
- ----------------------------------------------------------
TOTAL COMMON STOCKS
(COST $22,079,138) 23,070,720
- ----------------------------------------------------------
PREFERRED STOCK - 1.1%
ENTERTAINMENT & LEISURE - 1.1%
14,200 News Corporation Limited
(The), ADR 448,188
- ----------------------------------------------------------
TOTAL PREFERRED STOCK
(COST $352,114) 448,188
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ASSET-BACKED SECURITIES - 1.8%
ELECTRIC UTILITIES - 1.8%
$ 750,000 Peco Energy Transition
Trust, Series 1999-A,
Class A2 5.63% 03/01/05 735,870
- ----------------------------------------------------------
FINANCIAL SERVICES - 0.0%
8,283 Merrill Lynch Mortgage
Investors, Series
1991-I, Class A 7.65% 01/15/12 8,291
- ----------------------------------------------------------
TOTAL ASSET-BACKED
SECURITIES (COST $757,930) 744,161
- ----------------------------------------------------------
CORPORATE BONDS - 14.8%
BANKING - 3.0%
750,000 Associates Corporation
of North America 5.75% 11/01/03 726,727
250,000 BB&T 7.25% 06/15/07 250,313
250,000 Chase Manhattan 7.25% 06/01/07 252,506
726 Nykredit 6.00% 10/01/26 98
- ----------------------------------------------------------
1,229,644
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 0.4%
160,000 Coca-Cola Femsa 8.95% 11/01/06 158,585
- ----------------------------------------------------------
CHEMICALS - 0.2%
100,000 Belo 6.875% 06/01/02 99,947
- ----------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 0.9%
400,000 Computer Associates
International 6.375% 04/15/05 379,334
- ----------------------------------------------------------
ELECTRIC UTILITIES - 2.2%
215,000 Financiera Energy9.375% 06/15/06 187,061
750,000 Tennessee Valley
Authority 5.00% 12/18/03 712,814
- ----------------------------------------------------------
899,875
- ----------------------------------------------------------
FINANCIAL SERVICES - 5.2%
20,000 Access Financial 7.10% 05/15/21 20,263
750,000 AT&T Capital 7.50% 11/15/00 754,469
750,000 Ford Credit 5.75% 01/25/01 745,703
500,000 GMAC 7.125% 05/01/01 507,414
120,000 Paine Webber
Group 7.00% 03/01/00 120,531
- ----------------------------------------------------------
2,148,380
- ----------------------------------------------------------
Principal Value
Amount (Note 1)
CORPORATE BONDS - CONTINUED
MEDIA - BROADCASTING & PUBLISHING - 1.1%
$ 500,000 CSC Holdings 7.625% 07/15/18 $ 463,125
- ----------------------------------------------------------
METALS - 0.8%
300,000 AK Steel 9.125% 12/15/06 309,000
- ----------------------------------------------------------
MULTIPLE UTILITIES - 0.7%
300,000 New Brunswick 7.125% 10/01/02 306,918
- ----------------------------------------------------------
OIL & GAS - 0.3%
150,000 Petroleos
Mexicanos 8.85% 09/15/07 136,125
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $6,328,555) 6,130,933
- ----------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 11.1%
35,000 Federal National
Mortgage
Association 6.15% 10/25/07 34,948
500,000 Federal National
Mortgage
Association 6.00% 05/15/08 483,506
750,000 Federal National
Mortgage
Association 6.50% 04/29/09 722,461
688,722 Federal National
Mortgage
Association 6.50% 12/01/12 678,975
732,339 Federal National
Mortgage
Association 6.00% 01/01/14 707,328
500,000 Federal National
Mortgage
Association 6.247% 06/25/16 492,065
648,957 Federal National
Mortgage
Association 6.50% 07/18/28 629,417
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
750,000 Government
National
Mortgage
Association 4.00% 10/20/25 694,576
40,000 Merrill Lynch
Mortgage
Investment, 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 $4,767,645) 4,606,964
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
TOUCHSTONE BALANCED FUND
Principal Interest Maturity Value
Amount Rate Date (Note 1)
MUNICIPAL BONDS - 0.4%
HOUSING - 0.3%
$ 40,000 Baltimore Community
Development
Financing 8.20% 08/15/07 $ 43,577
40,000 New York State
Housing Finance
Agency Service 7.50% 09/15/03 41,092
50,000 Ohio Housing Financial
Agency 7.90% 10/01/14 51,484
- ----------------------------------------------------------
136,153
- ----------------------------------------------------------
TRANSPORTATION - 0.1%
30,000 Oklahoma City
Airport 9.40% 11/01/10 32,875
- ----------------------------------------------------------
TOTAL MUNICIPAL BONDS (COST $161,310) 169,028
- ----------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 1.6%
SOUTH AFRICA - 1.1%
ZAR 3,180,000 Republic of South
Africa 13.00% 08/31/10 465,094
- ----------------------------------------------------------
UNITED KINGDOM - 0.5%
GBP 105,000 United Kingdom
Treasury 8.00% 12/07/15 221,951
- ----------------------------------------------------------
TOTAL SOVEREIGN GOVERNMENT
OBLIGATIONS (COST $819,030) 687,045
- ----------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 11.6%
- ----------------------------------------------------------
705,000 U.S. Treasury
Bond 6.25% 04/30/01 713,593
975,000 U.S. Treasury
Bond 7.25% 08/15/22 1,089,247
975,000 U.S. Treasury
Bond 6.75% 08/15/26 1,040,203
595,000 U.S. Treasury
Note 5.75% 10/31/00 597,231
550,000 U.S. Treasury
Note 5.625% 05/15/01 551,031
550,000 U.S. Treasury
Note 5.75% 08/15/03 550,000
250,000 U.S. Treasury
Note 7.00% 07/15/06 264,844
- ----------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $4,929,953) 4,806,149
- ----------------------------------------------------------
Value
(Note 1)
TOTAL INVESTMENTS AT VALUE - 98.1%
(COST $40,195,675)(A) $40,663,188
CASH AND OTHER ASSETS
NET OF LIABILITIES - 1.9% 779,581
- ----------------------------------------------------------
NET ASSETS - 100.0% $41,442,769
==========================================================
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$40,195,675, resulting in gross unrealized appreciation and depreciation of
$2,857,845 and $2,390,332, respectively, and net unrealized appreciation of
$467,513.
ADR - American Depositary 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.
29
<PAGE>
TOUCHSTONE BOND FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
AGENCY FOR INTERNATIONAL DEVELOPMENT BONDS - 1.8%
CENTRAL AMERICA - 1.1%
$ 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 - 0.7%
100,000 Republic of Honduras
International
Development,
Series D+ 13.00% 06/01/11 140,651
100,000 Republic of Honduras
International
Development,
Series C+ 13.00% 06/01/06 123,850
- ----------------------------------------------------------
264,501
- ----------------------------------------------------------
TOTAL AGENCY FOR INTERNATIONAL
DEVELOPMENT BONDS (COST $575,000) 695,901
- ----------------------------------------------------------
ASSET-BACKED SECURITIES - 7.5%
CREDIT CARD RECEIVABLES - 1.6%
650,000 Discover Card Master
Trust, Series 1998-6,
Class A 5.85% 01/17/06 637,195
- ----------------------------------------------------------
ELECTRIC UTILITIES - 2.5%
1,000,000 Peco Energy Transition
Trust, Series 1999-A,
Class A4 5.80% 03/01/07 956,250
- ----------------------------------------------------------
FINANCIAL SERVICES - 3.4%
54,848 Chase Manhattan
Grantor Trust,
Series 1996-A,
Class A 5.20% 02/15/02 54,762
900,000 Chemical Credit
Card Master Trust,
Series 1996-2,
Class A 5.98% 09/15/08 876,591
113,506 Navistar Financial,
Series 1996-A,
Class A2 6.35% 11/15/02 113,860
248,944 World Omni Auto
Lease, Series 1997-B,
Class A3 6.18% 11/25/03 249,517
- ----------------------------------------------------------
1,294,730
- ----------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(COST $2,907,466) 2,888,175
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - 40.5%
AIRLINES - 3.8%
$1,500,000 Delta Air Lines,
Series C 6.65% 03/15/04 $ 1,461,135
- ----------------------------------------------------------
BANKING - 3.7%
500,000 Bank of New York 8.50% 12/15/04 539,475
500,000 Credit Suisse First
Boston - London 7.90% 05/01/07 486,783
350,000 First Union 6.55% 10/15/35 348,287
63,118 Mercantile Safe
Deposit+ 12.125% 01/02/01 63,276
- ----------------------------------------------------------
1,437,821
- ----------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 2.4%
1,000,000 Pepsi Bottling, 144A
5.625% 02/17/09 908,595
- ----------------------------------------------------------
COMMUNICATIONS - 1.3%
500,000 Harris Corporation
6.65% 08/01/06 502,339
- ----------------------------------------------------------
COMPUTERS & INFORMATION - 1.2%
500,000 International Business
Machines 5.375% 02/01/09 456,035
- ----------------------------------------------------------
ELECTRIC UTILITIES - 7.5%
1,000,000 Consumers Energy,
Series B 6.50% 06/15/18 958,216
1,000,000 PSE&G Capital 6.74% 10/23/01 995,326
1,000,000 Tennessee Valley Authority,
Series G 5.375% 11/13/08 922,046
- ----------------------------------------------------------
2,875,588
- ----------------------------------------------------------
ELECTRONICS - 2.5%
1,000,000 Raytheon 5.70% 11/01/03 969,948
- ----------------------------------------------------------
FINANCIAL SERVICES - 4.9%
200,000 Ford Credit 6.75% 05/15/05 199,666
750,000 Ford Credit 5.75% 02/23/04 722,564
1,000,000 Safeco Capital 8.072% 07/15/37 960,969
- ----------------------------------------------------------
1,883,199
- ----------------------------------------------------------
FOREST PRODUCTS & PAPER - 0.7%
250,000 Georgia-Pacific 9.50% 05/15/22 265,141
- ----------------------------------------------------------
HEALTH CARE PROVIDERS - 2.1%
850,000 Columbia/HCA
Health 6.73% 07/15/45 816,836
- ----------------------------------------------------------
HOUSING - 2.5%
1,000,000 Champion Enterprises,
144A 7.625% 05/15/09 963,213
- ----------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 2.0%
500,000 Cox Communications
6.375% 06/15/00 499,598
250,000 News America Holdings
10.125% 10/15/12 276,096
- ----------------------------------------------------------
775,694
- ----------------------------------------------------------
OIL & GAS - 1.9%
750,000 Husky Oil 8.90% 08/15/28 726,094
- ----------------------------------------------------------
RETAILERS - 1.3%
500,000 Wal-Mart Stores 5.85% 06/01/00 500,317
- ----------------------------------------------------------
TELEPHONE SYSTEMS - 2.7%
1,000,000 MCI Worldcom 8.875% 01/15/06 1,060,990
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $16,056,983) 15,602,945
- ----------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
TOUCHSTONE BOND FUND
Principal Interest Maturity Value
Amount Rate Date (Note 1)
MORTGAGE-BACKED SECURITIES - 32.6%
$ 249,708 Federal Government
Loan Mortgage
Corporation 7.00% 10/01/25 $ 247,743
310,441 Federal Government
Loan Mortgage
Corporation 7.00% 12/01/25 307,998
1,000,000 Federal Home Loan
Bank 5.625% 03/19/01 997,025
1,250,000 Federal National
Mortgage
Association 5.75% 04/15/03 1,235,716
500,000 Federal National
Mortgage
Association 5.75% 02/15/08 477,194
2,980,509 Federal National
Mortgage
Association 6.50% 07/01/28 2,882,839
387,417 Government
National Mortgage
Association 7.00% 02/15/09 392,810
3,162 Government
National Mortgage
Association 7.50% 07/15/23 3,198
365,619 Government
National Mortgage
Association 7.50% 12/15/25 369,699
668,368 Government
National Mortgage
Association 7.50% 12/15/27 675,828
1,270,530 Government
National Mortgage
Association 7.00% 05/15/28 1,255,500
931,652 Government
National Mortgage
Association 7.00% 07/15/28 920,631
1,995,518 Government
National Mortgage
Association 6.50% 09/15/28 1,923,626
920,000 Housing Securities6.75% 09/25/08 876,456
- ----------------------------------------------------------
TOTAL MORTGAGE-BACKED
SECURITIES (COST $12,928,263) 12,566,263
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
SOVEREIGN GOVERNMENT OBLIGATIONS - 2.7%
CANADA - 2.7%
$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 - 7.6%
600,000 U.S. Treasury
Bond 7.25% 05/15/16 658,500
1,500,000 U.S. Treasury
Note 5.25% 11/15/28 1,327,500
1,000,000 U.S. Treasury
Note 4.25% 11/15/03 943,438
- ----------------------------------------------------------
TOTAL U.S. TREASURY
OBLIGATIONS (COST $3,031,998) 2,929,438
- ----------------------------------------------------------
PREFERRED STOCKS - 4.8%
ELECTRIC UTILITIES - 2.8%
9,300 Appalachian Power, 8.25%
Cumulative 234,244
16,800 Columbus Southern Power,
8.375% Cumulative 424,200
17,500 Virginia Power Capital, 8.05%
Cumulative 439,688
- ----------------------------------------------------------
1,098,132
- ----------------------------------------------------------
OIL & GAS - 2.0%
29,900 Transcanada Pipelines, 8.75%
Cumulative 758,713
- ----------------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $1,888,618) 1,856,845
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 97.5%
(COST $38,465,768)(A) 37,567,017
CASH AND OTHER ASSETS
NET OF LIABILITIES - 2.5% 946,033
- ----------------------------------------------------------
NET ASSETS - 100.0% $38,513,050
==========================================================
Notes to the Schedule of Investments:
+ Restricted and Board valued security (Note 5).
(a) The aggregate identified cost for federal income tax purposes is
$38,465,768, resulting in gross unrealized appreciation and depreciation of
$214,896 and $1,113,647 respectively, and net unrealized depreciation of
$898,751.
144A - Securities restricted for resale to Qualified Institutional Buyers with
registration rights.
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
TOUCHSTONE STANDBY INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ASSET-BACKED SECURITIES - 30.4%
$ 454,043 Arcadia Automobile
Receivables Trust,
Series 1998-A,
Class A2 5.737% 07/16/01 $ 454,692
894,424 Auto Finance Group
Receivables Trust,
Series 1997-A,
Class A 6.35% 10/15/02 898,047
1,155,909 Auto Finance Group
Receivables Trust,
Series 1997-B,
Class A 6.20% 02/15/03 1,158,868
805,071 Capital Asset
Research Funding,
Series 1998-A,
Class A, 144A 5.905% 12/15/05 807,336
1,300,000 Chase Credit Card
Master Trust, Series
1998-6, Class B 5.498% 09/15/04 1,300,819
1,350,000 Health Care Receivables
Securitization Program,
Series 1996-1, Class A,
144A 7.20% 07/01/00 1,352,531
1,221,396 Mellon Auto Grantor
Trust, Series 1999-1,
Class B 5.76% 10/17/05 1,218,440
530,684 Summit Acceptance
Auto Trust, Series
1996-A, Class A1,
144A 7.01% 07/15/02 533,179
989,712 UCFC Home Equity
Loan, Series 1998-D,
Class AF1 6.105% 05/15/13 989,326
- ----------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(COST $8,718,187) 8,713,238
- ----------------------------------------------------------
COMMERCIAL PAPER - 26.8%
930,000 Armstrong World
Industries, 144A5.02% 07/06/1999 929,351
665,000 AT&T 5.13% 07/19/1999 663,295
1,375,000 Case Credit 5.22% 07/06/1999 1,374,003
1,250,000 Commonwealth
Edison 5.12% 07/07/1999 1,248,934
1,050,000 Conectiv, 144A 5.30% 07/12/1999 1,048,299
1,440,000 Dominion
Resources 5.80% 07/02/1999 1,439,768
975,000 Rohm & Haas,
144A 5.45% 07/06/1999 974,262
- ----------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $7,677,912) 7,677,912
- ----------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE BONDS - 30.5%
BANKING - 8.0%
$1,200,000 Banco
Latinoamericano6.70% 10/08/1999 $ 1,200,992
1,100,000 MBNA, MTN(a) 5.76% 07/07/03 1,092,160
- ----------------------------------------------------------
2,293,152
- ----------------------------------------------------------
COMMERCIAL SERVICES - 4.5%
1,300,000 Browning-Ferris
Industries 6.08% 01/18/00 1,288,625
- ----------------------------------------------------------
ELECTRIC UTILITIES - 8.9%
1,400,000 SCANA,
MTN(a) 5.53% 07/15/00 1,400,429
1,100,000 Texas Utilities
Electric 9.50% 08/01/1999 1,145,097
- ----------------------------------------------------------
2,545,526
- ----------------------------------------------------------
FINANCIAL SERVICES - 4.5%
1,300,000 AT&T Capital 6.16% 12/03/1999 1,299,472
- ----------------------------------------------------------
REAL ESTATE - 4.6%
1,300,000 Federal Realty
Investment
Trust, REIT 8.875% 01/15/00 1,318,260
- ----------------------------------------------------------
TOTAL CORPORATE BONDS
(COST $8,802,790) 8,745,035
- ----------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 12.8%
1,530,000 Federal Home
Loan Bank 5.35% 11/05/01 1,509,038
800,000 Federal Home
Loan Mortgage
Corporation 4.84% 07/19/1999 798,064
1,350,000 Federal Home
Loan Mortgage
Corporation
Series UB 6.00% 11/15/08 1,341,954
- ----------------------------------------------------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (COST $3,685,739) 3,649,056
- ----------------------------------------------------------
TOTAL INVESTMENTS AT VALUE - 100.5%
(COST $28,884,628)(B) 28,785,241
LIABILITIES NET OF CASH
AND OTHER ASSETS - (0.5)% (137,686)
- ----------------------------------------------------------
NET ASSETS - 100.0% $28,647,555
==========================================================
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
$28,884,628, resulting in gross unrealized appreciation and depreciation of
$6,399 and $105,786, respectively, and net unrealized depreciation of
$99,387.
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.
32
<PAGE>
<TABLE>
<CAPTION>
TOUCHSTONE VARIABLE SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
SMALL CAP EMERGING INTERNATIONAL INCOME HIGH
VALUE GROWTH EQUITY OPPORTUNITY YIELD
FUND FUND FUND FUND FUND
ASSETS:
<S> <C> <C> <C> <C> <C>
Investments, at value (Note 1)(a) $10,770,386 $32,435,085 $32,155,394 $30,648,072 $14,674,808
Cash 124,858 105,554 1,504,759 252,842 302,783
Foreign currency(b) -- -- 27,028 -- --
Receivables for:
Investments sold -- 72,105 94,478 751,875 --
Fund shares sold 2,120 63 2,807 104 4,221
Dividends 462 22,751 25,568 -- --
Foreign tax reclaims -- -- 45,815 -- --
Interest 1,299 11,192 4,158 826,851 424,858
Deferred organization
expenses (Note 1) -- 1,747 1,747 1,747 --
Reimbursement receivable from
Sponsor (Note 4) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total assets 10,899,125 32,648,497 33,861,754 32,481,491 15,406,670
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for:
Investments purchased 118,125 210,638 -- 1,000,000 --
Unrealized depreciation on
foreign forward currency
contracts (Note 1) -- -- -- -- --
Fund shares redeemed -- 38,957 -- 451,607 --
Due to custodian 2,373 5,873 19,059 6,678 4,468
Payable to Sponsor (Note 3) 950 112,978 85,336 74,757 2,093
Other accrued expenses 3,411 13,240 14,353 14,345 4,543
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities 124,859 381,686 118,748 1,547,387 11,104
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (C): $10,774,266 $32,266,811 $33,743,006 $30,934,104 $15,395,566
================================================================================================================================
Shares outstanding 1,006,308 1,825,867 2,384,734 3,589,936 1,566,531
================================================================================================================================
Net asset value $ 10.71 $ 17.67 $ 14.15 $ 8.62 $ 9.83
================================================================================================================================
(a) Cost of investments: $10,071,777 $27,967,784 $29,333,652 $33,859,963 $15,153,345
(b) Cost of foreign currency: $ -- $ -- $ 26,937 $ -- $ --
(c) See the Statements of Changes in Net Assets for components of net assets.
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
<CAPTION>
TOUCHSTONE VARIABLE SERIES TRUST
Statements of Assets and Liabilities continued
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
VALUE GROWTH & ENHANCED TOUCHSTONE TOUCHSTONE STANDBY
PLUS INCOME 30 BALANCED BOND INCOME
FUND FUND FUND FUND FUND FUND
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Investments, at value (Note 1)(a) $ 8,295,329 $78,802,683 $10,204,756 $40,663,188 $37,567,017 $28,785,241
Cash 157,783 1,089,637 514,822 643,283 554,539 3,792
Foreign currency(b) -- -- -- 40,862 -- --
Receivables for:
Investments sold 91,859 80,224 -- 195,284 -- --
Fund shares sold 5,325 104 16,236 42 42 --
Dividends 6,986 164,889 12,834 13,113 34,657 --
Foreign tax reclaims 156 4,473 -- 114 1,635 --
Interest 1,983 1,152 1,315 235,874 488,224 205,373
Deferred organization
expenses (Note 1) -- -- -- 1,747 -- 1,623
Reimbursement receivable
from Sponsor (Note 4) 18,003 -- 2,679 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total assets 8,577,424 80,143,162 10,752,642 41,793,507 38,646,114 28,996,029
- -------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for:
Investments purchased -- 35,064 -- 161,500 -- --
Unrealized depreciation on
foreign forward currency
contracts (Note 1) -- -- -- 11,520 -- --
Fund shares redeemed -- 39,216 -- 32,018 23,740 320,076
Due to custodian 7,659 13,100 3,656 7,829 8,497 6,866
Payable to Sponsor (Note 3) -- 237,076 -- 125,669 88,256 13,437
Other accrued expenses 7,071 14,579 2,726 12,202 12,571 8,095
- -------------------------------------------------------------------------------------------------------------------------------
Total liabilities 14,730 339,035 6,382 350,738 133,064 348,474
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (C): $ 8,562,694 $79,804,127 $10,746,260 $41,442,769 $38,513,050 $28,647,555
===============================================================================================================================
Shares outstanding 757,386 6,827,819 1,057,397 2,774,336 3,865,546 2,874,596
===============================================================================================================================
Net asset value $ 11.31 $ 11.69 $ 10.16 $ 14.94 $ 9.96 $ 9.97
===============================================================================================================================
(a) Cost of investments: $ 7,436,130 $67,660,062 $10,040,229 $40,195,675 $38,465,768 $28,884,628
(b) Cost of foreign currency: $ -- $ -- $ -- $ 48,187 $ -- $ --
(c) See the Statements of Changes in Net Assets for components of net assets.
The accompanying notes are an integral part of the financial statements.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
TOUCHSTONE VARIABLE SERIES TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
SMALL CAP EMERGING INTERNATIONAL INCOME HIGH
VALUE GROWTH EQUITY OPPORTUNITY YIELD
FUND(A) FUND FUND FUND FUND(A)
INVESTMENT INCOME (NOTE 1):
<S> <C> <C> <C> <C> <C>
Interest $ 20,111 $ 47,526 $ 40,988 $1,914,804 $ 224,500
Dividends (c) 1,411 104,454 355,495 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total investment income 21,522 151,980 396,483 1,914,804 224,500
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 12,978 121,438 160,014 108,075 14,382
Custody, administration and
fund accounting fees 10,926 42,778 104,599 45,784 11,661
Sponsor fees (Note 3) 3,244 30,359 33,687 33,254 4,794
Auditing fees 3,922 8,487 9,477 9,372 4,706
Printing fees 154 2,060 2,263 2,338 231
Legal fees 195 2,597 2,854 2,948 292
Amortization of organization
expenses (Note 1) -- 1,720 1,720 1,720 --
Trustee fees (Note 3) 126 1,681 1,848 1,910 189
Miscellaneous 223 2,266 2,449 2,499 334
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses 31,768 213,386 318,911 207,900 36,589
Waiver of Sponsor fee (Note 4) -- -- -- -- --
Reimbursement from Sponsor (Note 4) (15,272) (38,819) (108,366) (66,572) (17,083)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses 16,496 174,567 210,545 141,328 19,506
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 5,026 (22,587) 185,938 1,773,476 204,994
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain (loss) on:
Investments 6,946 2,573,360 2,323,215 (2,917,814) 13,125
Foreign currency -- -- (101,607) -- --
- -------------------------------------------------------------------------------------------------------------------------------
6,946 2,573,360 2,221,608 (2,917,814) 13,125
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 698,609 1,943,717 (1,975,457) 1,436,822 (478,537)
Foreign currency -- -- (5,270) -- --
- -------------------------------------------------------------------------------------------------------------------------------
698,609 1,943,717 (1,980,727) 1,436,822 (478,537)
NET REALIZED AND UNREALIZED GAIN (LOSS): 705,555 4,517,077 240,881 (1,480,992) (465,412)
===============================================================================================================================
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 710,581 $4,494,490 $ 426,819 $ 292,484 $ (260,418)
===============================================================================================================================
(a) The Fund commenced operations on May 1, 1999.
(b) The Fund commenced operations on January 1, 1999.
(c) Net of foreign tax withholding: $ -- $ -- $ 35,561 $ -- $ --
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
<CAPTION>
TOUCHSTONE VARIABLE SERIES TRUST
Statements of Operations continued
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
VALUE GROWTH & ENHANCED TOUCHSTONE TOUCHSTONE STANDBY
PLUS INCOME 30 BALANCED BOND INCOME
FUND FUND(B) FUND(A) FUND FUND(B) FUND
INVESTMENT INCOME (NOTE 1):
<S> <C> <C> <C> <C> <C> <C>
Interest $ 10,013 $ 26,982 $ 6,445 $ 576,573 $1,217,672 $ 813,342
Dividends (c) 38,293 896,252 27,365 124,929 91,079 --
- -------------------------------------------------------------------------------------------------------------------------------
Total investment income 48,306 923,234 33,810 701,502 1,308,751 813,342
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 23,577 308,327 10,379 168,963 107,725 33,811
Custody, administration and fund
accounting fees 45,015 65,678 10,927 44,785 40,919 40,410
Sponsor fees (Note 3) 6,287 77,082 3,194 42,241 39,173 27,049
Auditing fees 7,810 8,018 3,237 7,133 8,018 5,518
Printing fees 357 4,073 154 2,532 2,275 1,459
Legal fees 451 5,135 195 3,193 2,869 1,839
Amortization of organization
expenses (Note 1) -- -- -- 1,720 -- 1,873
Trustee fees (Note 3) 291 3,325 126 2,067 1,859 1,191
Miscellaneous 230 5,293 223 2,987 2,700 1,895
- -------------------------------------------------------------------------------------------------------------------------------
Total expenses 84,018 476,931 28,435 275,621 205,538 115,045
Waiver of Sponsor fee (Note 4) -- -- -- -- -- --
Reimbursement from Sponsor (Note 4) (47,867) (149,333) (16,253) (85,537) (58,641) (47,423)
- -------------------------------------------------------------------------------------------------------------------------------
Net expenses 36,151 327,598 12,182 190,084 146,897 67,622
- -------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 12,155 595,636 21,628 511,418 1,161,854 745,720
- -------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 154,388 215,506 -- 2,004,826 (158,525) (12,732)
Foreign currency -- -- -- 2,293 -- --
- -------------------------------------------------------------------------------------------------------------------------------
154,388 215,506 -- 2,007,119 (158,525) (12,732)
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 603,242 8,057,383 164,527 392,324 (1,596,132) (105,519)
Foreign currency -- -- -- (16,390) -- --
- -------------------------------------------------------------------------------------------------------------------------------
603,242 8,057,383 164,527 375,934 (1,596,132) (105,519)
NET REALIZED AND UNREALIZED GAIN (LOSS): 757,630 8,272,889 164,527 2,383,053 (1,754,657) (118,251)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS: $ 769,785 $8,868,525 $ 186,155 $2,894,471 $ (592,803) $ 627,469
===============================================================================================================================
(a) The Fund commenced operations on May 1, 1999.
(b) The Fund commenced operations on January 1, 1999.
(c) Net of foreign tax withholding: $ 57 $ 3,583 $ -- $ 1,295 $ -- $ --
The accompanying notes are an integral part of the financial statements.
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
TOUCHSTONE VARIABLE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
TOUCHSTONE TOUCHSTONE TOUCHSTONE
SMALL CAP EMERGING GROWTH INTERNATIONAL EQUITY
VALUE FUND FUND FUND
--------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD SIX MONTHS YEAR SIX MONTHS YEAR
ENDED(A) ENDED ENDED ENDED ENDED
JUNE 30, 1999 JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) (UNAUDITED) 1998 (UNAUDITED) 1998
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $ 5,026 $ (22,587) $ 35,176 $ 185,938 $ 139,038
Net realized gain (loss) 6,946 2,573,360 993,434 2,221,608 748,210
Net change in unrealized appreciation (depreciation) 698,609 1,943,717 (296,091) (1,980,727) 3,381,779
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 710,581 4,494,490 732,519 426,819 4,269,027
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (49,174) -- (164,384)
Realized capital gains -- -- (1,035,008) -- (845,182)
Distribution in excess of net investment income -- -- -- -- (106,570)
Return of capital distributions -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- (1,084,182) -- (1,116,136)
- -------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Capital contribution (Note 7) -- -- -- -- --
Proceeds from shares sold 10,063,743 1,829,015 13,916,105 2,265,087 12,081,975
Reinvestment of dividends -- -- 1,084,183 -- 1,116,136
Cost of shares redeemed (58) (5,320,597) (2,801,672) (2,761,926) (2,240,707)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from share transactions 10,063,685 (3,491,582) 12,198,616 (496,839) 10,957,404
Total increase (decrease) in net assets 10,774,266 1,002,908 11,846,953 (70,020) 14,110,295
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period -- 31,263,903 19,416,950 33,813,026 19,702,731
- -------------------------------------------------------------------------------------------------------------------------------
End of period $10,774,266 $32,266,811 $31,263,903 $33,743,006 $33,813,026
===============================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $10,063,685 $25,092,797 $28,584,379 $28,745,676 $29,242,515
Undistributed (distributions in excess of) net
investment income 5,026 (22,587) -- (944) (186,882)
Accumulated net realized gain (loss) on investments 6,946 2,729,300 155,940 2,181,820 (39,788)
Net unrealized appreciation (depreciation)
on investments 698,609 4,467,301 2,523,584 2,816,454 4,797,181
- -------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $10,774,266 $32,266,811 $31,263,903 $33,743,006 $33,813,026
===============================================================================================================================
SHARES OUTSTANDING (NOTE 1):
Share Contribution (Note 7) -- -- -- -- --
Shares sold 1,006,313 122,016 892,493 163,878 869,535
Reinvestment of dividends -- -- 73,504 -- 79,724
- -------------------------------------------------------------------------------------------------------------------------------
1,006,313 122,016 965,997 163,878 949,259
Shares redeemed (5) (334,886) (188,219) (201,035) (168,341)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,006,308 (212,870) 777,778 (37,157) 780,918
Beginning of period -- 2,038,737 1,260,959 2,421,891 1,640,973
- -------------------------------------------------------------------------------------------------------------------------------
End of period 1,006,308 1,825,867 2,038,737 2,384,734 2,421,891
===============================================================================================================================
(a) The Fund commenced operations on May 1, 1999.
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
<CAPTION>
TOUCHSTONE VARIABLE SERIES TRUST
Statements of Changes in Net Assets continued
TOUCHSTONE TOUCHSTONE TOUCHSTONE
INCOME OPPORTUNITY HIGH YIELD VALUE PLUS
FUND FUND FUND
------------------------ ------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
SIX MONTHS YEAR PERIOD SIX MONTHS PERIOD
ENDED ENDED ENDED(A) ENDED ENDED(B)
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) (UNAUDITED) 1998
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $ 1,773,476 $ 3,478,291 $ 204,994 $ 12,155 $ 7,993
Net realized gain (loss) (2,917,814) (4,004,977) 13,125 154,388 (239,885
Net change in unrealized appreciation (depreciation) 1,436,822 (4,418,973) (478,537) 603,242 255,957
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 292,484 (4,945,659) (260,418) 769,785 24,065
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (587,812) (3,478,834) -- -- (8,332
Realized capital gains -- -- -- -- --
Distribution in excess of net investment income -- -- -- -- --
Return of capital distributions -- (96,964) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (587,812) (3,575,798) -- -- (8,332
- -----------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Capital contribution (Note 7) -- -- -- -- --
Proceeds from shares sold 1,953,222 17,222,143 15,656,222 5,896,443 5,347,995
Reinvestment of dividends 587,812 3,575,798 -- -- 8,332
Cost of shares redeemed (5,805,615) (4,661,882) (238) (1,271,208) (2,204,386
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from share transactions (3,264,581) 16,136,059 15,655,984 4,625,235 3,151,941
Total increase (decrease) in net assets (3,559,909) 7,614,602 15,395,566 5,395,020 3,167,674
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 34,494,013 26,879,411 -- 3,167,674 --
- -----------------------------------------------------------------------------------------------------------------------------------
End of period $30,934,104 $34,494,013 $15,395,566 $ 8,562,694 $ 3,167,674
===================================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $40,367,382 $43,631,963 $15,655,984 $ 7,776,837 $ 3,151,602
Undistributed (distributions in excess of) net
investment income 1,185,664 -- 204,994 12,155 --
Accumulated net realized gain (loss) on investments (7,406,815) (4,489,001) 13,125 (85,497) (239,885
Net unrealized appreciation (depreciation) on investments (3,212,127) (4,648,949) (478,537) 859,199 255,957
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $30,934,104 $34,494,013 $15,395,566 $ 8,562,694 $ 3,167,674
===================================================================================================================================
SHARES OUTSTANDING (NOTE 1):
Share Contribution (Note 7) -- -- -- -- --
Shares sold 225,606 1,636,452 1,566,555 560,356 563,284
Reinvestment of dividends 69,192 369,671 -- -- 852
- -----------------------------------------------------------------------------------------------------------------------------------
294,798 2,006,123 1,566,555 560,356 564,136
Shares redeemed (676,037) (474,021) (24) (114,274) (252,832
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (381,239) 1,532,102 1,566,531 446,082 311,304
Beginning of period 3,971,175 2,439,073 -- 311,304 --
- -----------------------------------------------------------------------------------------------------------------------------------
End of period 3,589,936 3,971,175 1,566,531 757,386 311,304
===================================================================================================================================
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
GROWTH & ENHANCED BALANCED BOND STANDBY INCOME
INCOME FUND 30 FUND FUND FUND FUND
---------- ---------- ---------------------- ---------- -------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
SIX MONTHS PERIOD SIX MONTHS FOR THE SIX MONTHS SIX MONTHS FOR THE
ENDED(C) ENDED(A) ENDED YEAR ENDED(C) ENDED YEAR
JUNE 30, JUNE 30, JUNE 30, ENDED JUNE 30, JUNE 30, ENDED
1999 1999 1999 DECEMBER 31, 1999 1999 DECEMBER 31,
(UNAUDITED) (UNAUDITED) (UNAUDITED) 1998 (UNAUDITED) (UNAUDITED) 1998
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 595,636 $ 21,628 $ 511,418 $ 897,150 $ 1,161,854 $ 745,720 $ 1,244,839
Net realized gain (loss) 215,506 -- 2,007,119 1,451,424 (158,525) (12,732) 12,585
Net change in unrealized
appreciation (depreciation) 8,057,383 164,527 375,934 (1,134,565) (1,596,132) (105,519) 6,334
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 8,868,525 186,155 2,894,471 1,214,009 (592,803) 627,469 1,263,758
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- -- -- (922,633) (346,319) (747,840) (1,244,085)
Realized capital gains -- -- -- (1,163,140) -- -- --
Distribution in excess
of net investment income -- -- -- (10,746) -- -- --
Return of capital distributions -- -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- -- (2,096,519) (346,319) (747,840) (1,244,085)
- ----------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Capital contribution (Note 7) 74,660,781 -- -- -- 38,450,838 -- --
Proceeds from shares sold 4,423,391 10,560,501 3,045,713 21,290,408 3,819,039 5,202,686 22,250,007
Reinvestment of dividends -- -- -- 2,096,506 346,319 747,086 1,246,263
Cost of shares redeemed (8,148,570) (396) (5,747,134) (3,541,752) (3,164,024) (3,631,786)(14,628,204)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions 70,935,602 10,560,105 (2,701,421) 19,845,162 39,452,172 2,317,986 8,868,066
Total increase (decrease)
in net assets 79,804,127 10,746,260 193,050 18,962,652 38,513,050 2,197,615 8,887,739
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period -- -- 41,249,719 22,287,067 -- 26,449,940 17,562,201
- ----------------------------------------------------------------------------------------------------------------------------------
End of period $79,804,127 $10,746,260 $41,442,769 $41,249,719 $38,513,050 $28,647,555 $26,449,940
==================================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $55,654,506 $10,560,105 $38,065,750 $40,767,171 $33,212,050 $28,758,015 $26,440,029
Undistributed (distributions
in excess of) net
investment income 2,591,130 21,628 532,045 20,627 5,530,138 1,589 3,709
Accumulated net realized
gain (loss)
on investments 10,415,870 -- 2,401,402 394,283 669,613 (12,662) 70
Net unrealized appreciation
(depreciation) on investments 11,142,621 164,527 443,572 67,638 (898,751) (99,387) 6,132
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to
shares outstanding $79,804,127 $10,746,260 $41,442,769 $41,249,719 $38,513,050 $28,647,555 $26,449,940
==================================================================================================================================
SHARES OUTSTANDING (NOTE 1):
Share Contribution (Note 7) 7,146,024 -- -- -- 3,770,359 -- --
Shares sold 411,030 1,057,437 211,326 1,468,902 377,985 521,104 2,223,752
Reinvestment of dividends -- -- -- 150,809 34,280 74,797 124,567
- ----------------------------------------------------------------------------------------------------------------------------------
7,557,054 1,057,437 211,326 1,619,711 4,182,624 595,901 2,348,319
Shares redeemed (729,235) (40) (392,090) (257,510) (317,078) (363,642) (1,461,706)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 6,827,819 1,057,397 (180,764) 1,362,201 3,865,546 232,259 886,613
Beginning of period -- -- 2,955,100 1,592,899 -- 2,642,337 1,755,724
- ----------------------------------------------------------------------------------------------------------------------------------
End of period 6,827,819 1,057,397 2,774,336 2,955,100 3,865,546 2,874,596 2,642,337
==================================================================================================================================
(a) The Fund commenced operations on May 1, 1999.
(b) The Fund commenced operations on May 1, 1998.
(c) The Fund commenced operations on January 1, 1999.
The accompanying notes are an integral part of the financial statements.
38
</TABLE>
<PAGE>
<TABLE>
TOUCHSTONE VARIABLE SERIES TRUST
FINANCIAL HIGHLIGHTS
Selected data for a share outstanding:
<CAPTION>
TOUCHSTONE SMALL TOUCHSTONE EMERGING GROWTH
CAP VALUE FUND FUND
------------- ----------------------------------------------------------------
FOR THE FOR THE
PERIOD SIX MONTHS FOR THE FOR THE FOR THE FOR THE FOR THE
ENDED(A) ENDED YEAR YEAR YEAR YEAR PERIOD
JUNE 30, JUNE 30, ENDED ENDED ENDED ENDED ENDED(B)
1999 1999 DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
(UNAUDITED) (UNAUDITED) 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 15.33 $ 15.40 $ 12.20 $ 11.27 $ 10.10 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) -- (0.01) 0.02 0.03 0.04 0.11 0.04
Net realized and unrealized gain (loss)
on investments 0.71 2.35 0.46 4.06 1.22 1.87 0.06
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.71 2.34 0.48 4.09 1.26 1.98 0.10
- -------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- -- (0.03) (0.03) (0.04) (0.15) --
Realized capital gains -- -- (0.52) (0.86) (0.29) (0.66) --
Return of capital -- -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- (0.55) (0.89) (0.33) (0.81) --
Net asset value, end of period $ 10.71 $ 17.67 $ 15.33 $ 15.40 $ 12.20 $ 11.27 $ 10.10
===============================================================================================================================
Total return(c) 7.10% 19.05% 3.28% 33.67% 11.16% 19.57% 1.00%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $10,774 $32,267 $31,264 $19,417 $ 5,771 $ 2,615 $ 2,020
Ratios to average net assets:
Net Expenses 1.00%(d) 1.15%(d) 1.15% 1.15% 1.15% 1.15% 1.15%(d)
Net investment income (loss) 0.30%(d) (0.15)%(d) 0.14% 0.27% 0.50% 1.09% 3.67%(d)
Expenses, without waiver and reimbursement 1.92%(d) 1.41%(d) 1.49% 2.19% 3.22% 3.73% 11.08%(d)
===============================================================================================================================
Portfolio Turnover 7% 56% 66% 88% 89% 101% 0%
39
<PAGE>
<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, ENDED ENDED ENDED ENDED ENDED(B)
1999 DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
(UNAUDITED) 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.96 $ 12.01 $ 11.07 $ 10.00 $ 9.51 $ 10.00
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.08 0.06 0.07 0.06 0.04 --
Net realized and unrealized gain (loss)
on investments 0.11 2.37 1.56 1.08 0.48 (0.49)
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations 0.19 2.43 1.63 1.14 0.52 (0.49)
- -----------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- (0.10) (0.05) (0.07) (0.03) --
Realized capital gains -- (0.38) (0.64) -- -- --
Return of capital -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.48) (0.69) (0.07) (0.03) --
Net asset value, end of period $ 14.15 $ 13.96 $ 12.01 $ 11.07 $ 10.00 $ 9.51
=================================================================================================================
Total return(c) 21.84% 20.21% 14.76% 11.47% 15.45% (4.90)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $33,743 $33,813 $19,703 $ 8,758 $ 5,215 $ 4,757
Ratios to average net assets:
Net Expenses 1.25%(d) 1.25% 1.25% 1.25% 1.25% 1.25%(d)
Net investment income (loss) 1.10%(d) 0.49% 0.71% 0.86% 0.46% 1.23%(d)
Expenses, without waiver and reimbursement 1.89%(d) 1.95% 3.19% 3.03% 3.69% 5.58%(d)
Portfolio Turnover 97% 141% 149% 90% 86% 0%
=================================================================================================================
(a) The Fund commenced operations on May 1, 1999.
(b) The Fund commenced operations on November 21, 1994.
(c) Total returns would have been lower had certain expenses not been
reimbursed or waived during the periods shown. (Note 4)
(d) Ratios are annualized.
The accompanying notes are an integral part of the financial statements.
40
</TABLE>
<PAGE>
<TABLE>
TOUCHSTONE VARIABLE SERIES TRUST
Financial Highlights continued
<CAPTION>
Selected data for a share outstanding:
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, ENDED ENDED ENDED ENDED ENDED(B)
1999 DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
(UNAUDITED) 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.69 $ 11.02 $ 11.21 $ 10.09 $ 9.42 $ 10.00
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.48 1.02 1.20 1.17 1.22 0.12
Net realized and unrealized gain (loss)
on investments (0.40) (2.30) 0.11 1.45 0.79 (0.70)
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations 0.08 (1.28) 1.31 2.62 2.01 (0.58)
- -----------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income (0.15) (1.02) (1.19) (1.17) (1.34) --
Realized capital gains -- -- (0.31) (0.33) -- --
Return of capital -- (0.03) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.15) (1.05) (1.50) (1.50) (1.34) --
Net asset value, end of period $ 8.62 $ 8.69 $ 11.02 $ 11.21 $10.09 $ 9.42
=================================================================================================================
Total return(e) (11.43)% (12.27)% 12.03% 27.37% 23.35% (5.80)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $30,959 $34,494 $26,879 $ 8,268 $2,602 $1,883
Ratios to average net assets:
Net Expenses 0.85%(f) 0.85% 0.85% 0.85% 0.85% 0.85%(f)
Net investment income (loss) 10.68%(f) 10.40% 10.93% 11.85% 12.81% 11.24%(f)
Expenses, without waiver and reimbursement 1.25%(f) 1.25% 1.72% 2.85% 3.54% 11.56%(f)
Portfolio Turnover 108% 175% 189% 213% 104% 45%
=================================================================================================================
41
<PAGE>
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
HIGH YIELD VALUE PLUS GROWTH & ENHANCED
FUND FUND INCOME FUND 30 FUND
---------- ------------------------- ---------- -----------
FOR THE FOR THE FOR THE FOR THE
PERIOD SIX MONTHS FOR THE SIX MONTHS PERIOD
ENDED(A) ENDED PERIOD ENDED(D) ENDED(A)
JUNE 30, JUNE 30, ENDED(C) JUNE 30, JUNE 30,
1999 1999 DECEMBER 1999 1999
(UNAUDITED) (UNAUDITED) 31, 1998 (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 10.18 $ 10.00 $ 10.43 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.13 0.02 0.03 0.38 0.02
Net realized and unrealized gain (loss)
on investments (0.30) 1.11 0.18 0.88 0.14
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.17) 1.13 0.21 1.26 0.16
- ------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- -- (0.03) -- --
Realized capital gains -- -- -- -- --
Return of capital -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- (0.03) -- --
Net asset value, end of period $ 9.83 $ 11.31 $ 10.18 $ 11.69 $ 10.16
==============================================================================================================================
Total return(e) (1.70)% 11.10% 2.11% 12.08% 1.60%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $15,396 $ 8,563 $ 3,168 $79,804 $10,746
Ratios to average net assets:
Net Expenses 0.80%(f) 1.15%(f) 1.15%(f) 0.85%(f) 0.75%(f)
Net investment income (loss) 8.40%(f) 0.39%(f) 0.65%(f) 1.54%(f) 1.33%(f)
Expenses, without waiver and reimbursement 1.50%(f) 2.67%(f) 7.49%(f) 1.24%(f) 1.75%(f)
Portfolio Turnover 32% 34% 100% 31% 0%
==============================================================================================================================
<PAGE>
<CAPTION>
TOUCHSTONE BALANCED FUND
----------------------------------------------------------------
FOR THE
SIX MONTHS FOR THE FOR THE FOR THE FOR THE FOR THE
ENDED YEAR YEAR YEAR YEAR PERIOD
JUNE 30, ENDED ENDED ENDED ENDED ENDED(B)
1999 DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
(UNAUDITED) 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.96 $ 13.99 $ 12.84 $ 11.48 $ 10.17 $ 10.00
- ----------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.18 0.35 0.31 0.30 0.32 0.05
Net realized and unrealized gain (loss)
on investments 0.80 0.40 2.05 1.60 2.15 0.12
- ----------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.98 0.75 2.36 1.90 2.47 0.17
- ----------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- (0.37) (0.32) (0.30) (0.37) --
Realized capital gains -- (0.41) (0.89) (0.24) (0.79) --
Return of capital -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.78) (1.21) (0.54) (1.16) --
Net asset value, end of period $ 14.94 $ 13.96 $ 13.99 $ 12.84 $ 11.48 $ 10.17
======================================================================================================================
Total return(e) 12.84% 5.44% 18.61% 16.78% 24.56% 1.70%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $41,443 $41,250 $22,287 $ 6,695 $ 2,895 $ 2,034
Ratios to average net assets:
Net Expenses 0.90%(f) 0.90% 0.90% 0.90% 0.90% 0.90%(f)
Net investment income (loss) 2.42%(f) 2.67% 2.61% 2.76% 2.87% 4.26%(f)
Expenses, without waiver and reimbursement 1.31%(f) 1.37% 2.04% 2.72% 3.46% 8.97%(f)
Portfolio Turnover 52% 51% 86% 75% 124% 3%
======================================================================================================================
(a) The Fund commenced operations on May 1, 1999.
(b) The Fund commenced operations on November 21, 1994.
(c) The Fund commenced operations on May 1, 1998.
(d) The Fund commenced operations on January 1, 1999.
(e) Total returns would have been lower had certain expenses not been
reimbursed or waived during the periods shown. (Note 4)
(f) Ratios are annualized.
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Financial Highlights continued
Selected data for a share outstanding:
TOUCHSTONE TOUCHSTONE STANDBY INCOME
BOND FUND FUND
-------------- -------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS FOR THE FOR THE FOR THE FOR THE FOR THE
ENDED(A) ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED(B)
JUNE 30, 1999 JUNE 30, 1999 DECEMBER DECEMBER DECEMBER DECEMBER DECEMBER
(UNAUDITED) (UNAUDITED) 31, 1998 31, 1997 31, 1996 31, 1995 31, 1994
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.19 $ 10.01 $ 10.00 $ 10.01 $ 10.02 $ 10.03 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 1.52 0.27 0.55 0.54 0.52 0.56 0.05
Net realized and unrealized gain (loss)
on investments (1.66) (0.04) 0.01 (0.01) (0.01) (0.01) 0.03
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.14) 0.23 0.56 0.53 0.51 0.55 0.08
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (0.09) (0.27) (0.55) (0.54) (0.52) (0.56) (0.05)
Realized capital gains -- -- -- -- -- -- --
Return of capital -- -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.09) (0.27) (0.55) (0.54) (0.52) (0.56) (0.05)
Net asset value, end of period $ 9.96 $ 9.97 $ 10.01 $ 10.00 $ 10.01 $ 10.02 $ 10.03
===================================================================================================================================
Total return(c) (1.38)% 8.20% 5.71% 5.41% 5.18% 5.90% 0.30%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $38,513 $28,648 $26,450 $17,562 $9,105 $5,790 $5,013
Ratios to average net assets:
Net Expenses 0.75%(d) 0.50%(d) 0.50% 0.50% 0.50% 0.50% 0.50%(d)
Net investment income 5.93%(d) 5.51%(d) 5.47% 5.42% 5.15% 5.59% 4.90%(d)
Expenses, without waiver and reimbursement 1.05%(d) 0.85%(d) 0.95% 1.48% 1.54% 1.73% 3.67%(d)
Portfolio Turnover 29% 36% 328% 251% 143% 159% 56%
===================================================================================================================================
(a) The Fund commenced operations on January 1, 1999.
(b) The Fund commenced operations on November 21, 1994.
(c) Total returns would have been lower had certain expenses not been
reimbursed or waived during the periods shown. (Note 4)
(d) Ratios are annualized.
The accompanying notes are an integral part of the financial statements.
43
</TABLE>
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Touchstone Variable Series Trust (the "Trust") is registered under the
Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company, and was organized as a Massachusetts business
trust on February 7, 1994. The Trust consists of eleven Funds: Touchstone Small
Cap Value Fund, Touchstone Emerging Growth Fund, Touchstone International Equity
Fund, Touchstone Income Opportunity Fund, Touchstone High Yield Fund, Touchstone
Value Plus Fund, Touchstone Growth & Income Fund, Touchstone Enhanced 30 Fund,
Touchstone Balanced Fund, Touchstone Bond Fund and Touchstone Standby Income
Fund (collectively, the "Funds"). The Touchstone Growth & Income Fund and the
Touchstone Bond Fund commenced operations on January 1, 1999. The Touchstone
Small Cap Value Fund, Touchstone High Yield Fund and Touchstone Enhanced 30 Fund
commenced operations on May 1, 1999. Prior to January 1999, the Trust was called
Select Advisors Variable Insurance Trust and each existing Fund available at
that time was referred to as a "Portfolio".
The Declaration of Trust permits the Trust to issue an unlimited number of
shares of beneficial interest. The Trust offers shares of beneficial interest of
each Fund to separate accounts of Western-Southern Life Assurance Company
("Western-Southern") as a funding vehicle for certain variable annuity contracts
issued by Western-Southern through the separate accounts.
As of June 30, 1999, Touchstone Advisors, Inc., a subsidiary of
Western-Southern, and Western-Southern owned 100% of the outstanding shares of
the Trust.
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
on such exchanges, or at the quoted 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 in accordance with procedures established by the Trustees
using 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 debt securities with a remaining maturity of less than 60
days are valued at amortized cost, which approximates market.
44
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Foreign Currency Translation. The accounting records of the Funds are maintained
in U.S. dollars. The market value of investment securities, other assets and
liabilities and forward currency 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 statements
of operations from the effects of changes in market prices of these securities,
but are included with the 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 upon notification 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. Distributions to shareholders for all Funds in the
Trust, except the Touchstone Standby Income Fund, are recorded by each Fund
annually. It is the policy of the Touchstone 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.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from GAAP. Permanent book and tax basis
differences relating to shareholder distributions will result in
reclassifications to paid-in capital. These differences, which may result in
distribution reclassifications, are primarily due to differing treatments for
foreign currency transactions, passive foreign investment companies (PFIC), and
losses deferred due to wash sales, paydown gains and losses on certain
securities and excise tax regulations. Undistributed net investment income and
accumulated net realized gains and losses 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.
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 its income, including
net realized capital gains, if any, within the prescribed time periods.
Accordingly, no provision for a federal income tax is necessary.
45
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Notes to Financial Statements continued
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 foreign currency 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 or 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 In Exchange Appreciation/
Fund Name Maturity Deliver/Receive For Value (Depreciation)
Touchstone Balanced Fund
<S> <C> <C> <C> <C> <C> <C>
Sales 9/24/99 GBP 117,800 $187,373 $185,790 $ 1,583
9/13/99 ZAR 2,321,000 371,360 384,463 (13,103)
- --------------------------------------------------------------------------------------
(11,520)
======================================================================================
GBP -- Great British Pound
ZAR -- South African Rand
<CAPTION>
Touchstone International Equity Fund
<S> <C> <C> <C> <C> <C> <C>
Sales 7/01/99 JPY 319,812 $2,642 $2,642 $--
- --------------------------------------------------------------------------------------
JPY -- Japanese Yen
</TABLE>
46
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Organization Expense. Organization expenses were deferred and are being
amortized by each Fund except the Touchstone Small Cap Value Fund, Touchstone
High Yield Fund, Touchstone Value Plus Fund, Touchstone Growth & Income Fund,
Touchstone Enhanced 30 Fund and Touchstone Bond 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 number of the Initial Shares of the
Fund redeemed to the number of the Initial Shares of the Fund outstanding after
taking into account any prior redemptions of the Initial Shares of the Fund.
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 established by the
Trust's Board of Trustees. 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.
Securities 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.
2. RISKS ASSOCIATED WITH FOREIGN INVESTMENTS
Some of the Funds may invest in the securities of foreign issuers. Investing in
securities issued by companies whose principal business activities are outside
the U.S. 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, limitations 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 U.S., 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.
47
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Notes to Financial Statements continued
3. TRANSACTIONS WITH AFFILIATES
Sponsor. Touchstone Advisors, Inc. ("Sponsor" or "Advisor"), a subsidiary of
Western-Southern, as sponsor to the Trust, pursuant to a Sponsor Agreement,
provides oversight of the various service providers to the Trust, including the
Trust's administrator, custodian and transfer agent. The Sponsor reserves the
right to receive a sponsor fee from each Fund on an annual basis up to 0.20% of
average daily net assets of that Fund. The Sponsor Agreement may be terminated
by the Sponsor or by the Trust on not less than 30 days prior written notice.
Investment Advisor. The Trust also has an investment advisory agreement with the
Advisor. Under the terms of the investment advisory agreement, each Fund pays a
fee that is computed daily and paid monthly. For the six months ended June 30,
1999, each Fund incurred investment advisory fees equal on an annual basis to
the following percentages of the average daily net assets of the Fund:
Touchstone
Touchstone Touchstone Touchstone Income Touchstone Touchstone
Small Cap Emerging International Opportunity High Yield Value Plus
Value Fund Growth Fund Equity Fund Fund Fund Fund
Rate 0.80% 0.80% 0.95% 0.65% 0.60% 0.75%
- --------------------------------------------------------------------------------
Touchstone Touchstone Touchstone Touchstone Touchstone
Growth & Enhanced Balanced Bond Standby
Income Fund 30 Fund Fund Fund Income Fund
Rate 0.80% 0.65% 0.80% 0.55% 0.25%
- --------------------------------------------------------------------------------
Subject to review and approval by the Board of Trustees, the Advisor may enter
into 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:
Touchstone Small Cap Value Fund
Todd Investment Advisors, Inc. 0.50%
Touchstone 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
Touchstone 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
Touchstone Income Opportunity Fund
Alliance Capital Management LP 0.40% on the first $50 million
0.35% on the next $20 million
0.30% on the next $20 million
0.25% thereafter
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<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Touchstone High Yield Fund
Fort Washington Investment Advisors, Inc. 0.40%
Touchstone Value Plus Fund
Fort Washington Investment Advisors, Inc. 0.45%
Touchstone Growth & Income Fund
Scudder Kemper Investments, Inc. 0.50% on the first $150 million
0.45% thereafter
Touchstone Enhanced 30 Fund
Todd Investment Advisors, Inc. 0.40%
Touchstone Balanced Fund
OpCap Advisors, Inc. 0.60% on the first $20 million*
0.50% on the next $30 million*
0.40% thereafter*
Touchstone Bond Fund
Fort Washington Investment Advisors, Inc. 0.30%
Touchstone Standby Income Fund
Fort Washington Investment Advisors, Inc. 0.15%
* Includes assets of the Touchstone Balanced Fund of the Touchstone Variable
Series Trust and the Touchstone Balanced Fund of the Touchstone Series Trust
(for which OpCap Advisors also acts in an investment advisory capacity).
Fort Washington Investment Advisors, Inc., and Todd Investment Advisors, Inc.
are affiliates of the Sponsor.
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. For the six months ended June 30, 1999, the Trust
incurred $14,613 in Trustee fees.
4. EXPENSE REIMBURSEMENTS
The Advisor has agreed to waive fees and reimburse each Fund so that, following
such waiver of fees and reimbursement, the aggregate total operating expenses
(excluding interest, taxes, brokerage commissions and extraordinary expenses) of
each Fund are not greater, on an annualized basis, than the percentage of
average daily net assets of the Fund listed below:
<TABLE>
<CAPTION>
Touchstone
Touchstone Touchstone Touchstone Income Touchstone Touchstone
Small Cap Emerging International Opportunity High Yield Value Plus
Value Fund Growth Fund Equity Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Voluntary
expense limit 1.00% 1.15% 1.25% 0.85% 0.80% 1.15%
Amount of
reimbursement $15,272 $38,819 $108,366 $66,572 $17,083 $47,867
- ----------------------------------------------------------------------------------------
<CAPTION>
Touchstone Touchstone Touchstone Touchstone Touchstone
Growth & Enhanced Balanced Bond Standby
Income Fund 30 Fund Fund Fund Income Fund
Voluntary
expense limit 0.85% 0.75% 0.90% 0.75% 0.50%
Amount of
reimbursement $149,333 $16,253 $85,537 $58,641 $47,423
- ----------------------------------------------------------------------------
</TABLE>
The Advisor has agreed that it will continue to waive fees and reimburse each
Fund as described above through December 31, 1999.
49
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Notes to Financial Statements continued
5. PURCHASES AND SALES OF INVESTMENT SECURITIES
Investment transactions (excluding purchases and sales of U.S. government
obligations, U.S. government agency obligations and short-term investments) for
the six months ended June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Touchstone
Touchstone Touchstone Touchstone Income Touchstone Touchstone
Small Cap Emerging International Opportunity High Yield Value Plus
Value Fund Growth Fund Equity Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
Cost of purchases $10,787,758 $16,166,171 $31,473,380 $34,384,639 $19,718,150 $6,670,201
Proceeds from
sales $ 722,927 $17,004,149 $31,136,560 $35,773,303 $ 4,593,125 $1,989,430
- -----------------------------------------------------------------------------------------
<CAPTION>
Touchstone Touchstone Touchstone Touchstone Touchstone
Growth & Enhanced Balanced Bond Standby
Income Fund 30 Fund Fund Fund Income Fund
<S> <C> <C> <C> <C> <C>
Cost of purchases $23,455,980 $10,040,229 $17,976,023 $9,169,992 $10,762,716
Proceeds from
sales $26,070,502 $ -- $20,301,269 $4,963,598 $ 5,501,517
- -------------------------------------------------------------------------------
</TABLE>
Purchases and sales of U.S. government obligations (excluding short-term
investments) for the six months ended June 30, 1999 were as follows:
Touchstone Touchstone Touchstone
Balanced Bond Standby
Fund Fund Income Fund
Cost of purchases $3,251,014 $4,017,016 $2,887,675
Proceeds from sales $2,357,035 $5,730,406 $1,100,000
6. 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,
Touchstone Bond Fund held restricted securities valued at $759,177 by the
Trustees, representing 1.97% of net assets.
Acquisition date and cost of each are as follows:
Acquisition Date Cost
Mercantile Safe Deposit 3/28/85 $ 71,379
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
The Bond II Portfolio of Select Advisors Portfolios received these securities
from The Western and Southern Life Insurance Company Separate Account A on
November 21, 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 Touchstone Bond Fund. (Note 7)
50
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
As of June 30, 1999, Touchstone Income Opportunity Fund held restricted
securities valued at $275,000 by the Trustees, representing 0.89% 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 11/7/96 287,500
7. CAPITAL CONTRIBUTION
The Touchstone Growth & Income Fund and the Touchstone Bond Fund were newly
established Funds, effective immediately after the close of business on December
31, 1998. At that time, shares of the newly established Touchstone Growth &
Income Fund and Touchstone Bond Fund were substituted for shares of the Select
Advisors Portfolios: Growth & Income II Portfolio and Select Advisors
Portfolios: Bond II Portfolio, respectively. Thus, an initial capital
contribution equal to the amount of each respective Portfolio's net assets was
made at that time.
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.
51
