LETTER FROM THE PRESIDENT
--------------------------------------------------------------------------------
Dear Fellow Touchstone Contract Owner:
Thank you for owning a Touchstone variable annuity. We are pleased to provide
you with this update of the investment activity and performance of the
Touchstone Variable Series Trust for the six months ended June 30, 2000.
LOOKING BACK
After finishing 1999 in record territory, most major U.S. stock market indices
surrendered ground in the first half of 2000 in the face of concern over
inflation pressures and higher interest rates. Internationally, stock market
results were mixed, with major indices declining overall. Fixed-income markets
meanwhile rallied on signs of economic moderation. Movements in the various
financial markets came as the Federal Reserve continued to tighten financial
market conditions by hiking the Federal Funds interest rate 100 basis points.
THE VALUE OF PROFESSIONAL MANAGEMENT
As noted above, the year so far has been a challenging one for investors. The
investment outlook has been difficult to ascertain amid sometimes conflicting
indicators of economic growth and market conditions. That is why we strive to
provide outstanding long-term professional investment management through the
investment options offered in your Touchstone variable annuity contract. We
carefully select managers whose resources, skills and commitment to excellence
we believe to rank among the best in their respective investment disciplines.
These professionals bring experience and expertise to bear on your behalf every
day. We believe that our exclusive lineup of retail and institutional money
managers offers you the best of both worlds. That is a considerable advantage,
especially in uncertain investment times.
YOUR NEWEST OPTION
We are proud to offer you a new investment option in your Touchstone variable
annuity contract. The Deutsche VIT Equity 500 Index Fund became available for
investment effective May 1, 2000. Managed by Bankers Trust Company, the fund
seeks to match, as closely as possible (before expenses), the performance of the
S&P 500 Index. The fund invests primarily in common stocks of companies that
apprise the S&P 500, which emphasizes large U.S. companies. Bankers Trust is a
premier index investment manager and this new option offers you the opportunity
to share in the growth potential of some of America's premier companies.
LOOKING AHEAD
The Federal Reserve continues to seek to cool the U.S. economy to a sustainable
growth level where supply and demand are balanced and inflation thereby held in
check. Advancing technology, improved productivity, higher energy prices, tight
labor markets and heightened business competition worldwide are just some of the
factors at work in the present investment climate. Regardless of what the future
holds, companies that can perform on their own merits will most likely be the
ones offering the best opportunities. As they assess the forces that drive the
financial markets, our managers will remain steadfastly focused on identifying
the opportunities and the companies capable of succeeding in any economic
environment. Their overriding goal, as well as ours, is to deliver superior
long-term performance.
<PAGE>
Thank you again for the opportunity to work on your behalf. We appreciate your
continued confidence in Touchstone and, as always, pledge every effort to
continue to merit your trust.
Sincerely,
/s/ Jill T. McGruder
Jill T. McGruder
President and Chief Executive Officer
Touchstone Family of Funds and Variable Annuities
P.S. Allow me to again call your attention to our enhanced presence on the web
at www.touchstonefunds.com. We continue to add improvements to make it more
convenient and useful for you. Your comments are valued.
Touchstone Variable Annuities are underwritten by Western-Southern Life
Assurance Company, Cincinnati, Ohio, and distributed by Touchstone Securities,
Inc.* For a prospectus containing more information, including all fees and
expenses, call 800.669.2796. read the prospectus carefully before investing or
sending money.
*Member NASD/SIPC
<PAGE>
TOUCHSTONE SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Value
Shares (Note 1)
COMMON STOCKS - 97.1%
BEVERAGES, FOOD & TOBACCO - 2.3%
9,000 Hain Celestial Group Inc.* $ 330,188
--------------------------------------------------------
COMMERCIAL SERVICES - 4.1%
5,400 Advance Paradigm* 110,700
10,400 Meta Group Inc* 203,450
25,600 Provant* 140,001
11,000 Workflow Management* 130,625
--------------------------------------------------------
584,776
--------------------------------------------------------
COMMUNICATIONS - 15.7%
11,800 Applied Signal Technology 136,438
5,000 C-COR.net* 135,000
30,000 Comdial* 133,125
13,500 Comtech Telecommunications* 222,750
22,000 Corsair Communications* 632,500
9,300 Harmonic Inc* 230,175
6,700 Hello Direct* 79,563
20,000 Performance Technologies* 170,000
6,300 ViaSat* 341,775
5,000 XETA* 155,938
--------------------------------------------------------
2,237,264
--------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 12.1%
6,500 Aladdin Knowledge Systems* 102,781
30,000 Applix* 232,500
3,000 Barra Inc.* 148,688
7,000 Bluestone Software* 179,813
5,000 FileNet* 91,563
5,000 Hall Kinion & Assoc. Inc* 166,563
94,000 Learn2.com* 185,067
4,000 Serena Software Inc* 181,625
9,600 Take-Two Interactive Software* 116,400
4,150 Tumbleweed Communications* 211,131
6,000 Unify* 51,375
23,900 ZapMe!* 65,725
--------------------------------------------------------
1,733,231
--------------------------------------------------------
COMPUTERS & INFORMATION - 14.4%
21,000 Advanced Digital Information* 334,688
4,500 Cybex Computer Products* 190,125
6,600 Datalink* 98,588
30,000 Dot Hill Systems* 330,000
2,300 Emulex Corp* 151,081
5,200 Mercury Computer Systems* 168,025
4,600 ScanSource* 178,825
21,280 Troy Group* 316,540
6,000 Xircom* 285,000
--------------------------------------------------------
2,052,872
--------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.2%
3,200 DSP Group Inc.* 179,200
7,000 MKS Instruments Inc.* 273,875
--------------------------------------------------------
453,075
--------------------------------------------------------
ELECTRONICS - 17.2%
5,500 Actel* 250,938
6,400 Alliance Semiconductor* 157,200
10,000 Anadigics* 340,625
14,400 Finisar* 377,100
Value
Shares (Note 1)
ELECTRONICS - 17.2% - Continued
24,100 Hauppauge Digital* $ 233,467
7,200 Parlex* 303,300
31,000 Ramtron International* 608,375
4,600 Telcom Semiconductor* 184,288
--------------------------------------------------------
2,455,293
--------------------------------------------------------
FINANCIAL SERVICES - 0.3%
1,500 BlackRock* 43,500
--------------------------------------------------------
HEALTH CARE PROVIDERS - 1.0%
2,400 Express Scripts, Class A* 149,100
--------------------------------------------------------
HUMAN RESOURCES - 0.9%
5,700 Avert Inc* 130,388
--------------------------------------------------------
INDUSTRIAL - DIVERSIFIED - 0.9%
10,000 Zomax* 130,625
--------------------------------------------------------
INSURANCE - 0.3%
9,000 GAINSCO 45,000
--------------------------------------------------------
MEDICAL SUPPLIES - 14.5%
10,000 Excel Technology* 503,125
6,000 ICU Medical* 158,250
8,400 II-VI* 406,350
31,000 LaserSight* 118,182
5,400 Molecular Devices* 373,613
14,850 North American Scientific* 266,372
5,100 Zoll Medical Corporation* 249,900
--------------------------------------------------------
2,075,792
--------------------------------------------------------
OIL & GAS - 3.0%
4,500 Marine Drilling Companies* 126,000
2,100 Pride International* 51,975
8,800 Swift Energy* 249,700
--------------------------------------------------------
427,675
--------------------------------------------------------
PHARMACEUTICALS - 3.1%
6,500 Guilford Pharmaceuticals* 97,906
4,500 Invitrogen* 338,414
--------------------------------------------------------
436,320
--------------------------------------------------------
TELEPHONE SYSTEMS - 4.1%
17,800 Audiovox, Class A* 392,713
7,700 Hector Communications* 101,063
7,000 Hickory Tech 85,313
--------------------------------------------------------
579,089
--------------------------------------------------------
TOTAL COMMON STOCKS
(COST $12,580,490) $13,864,188
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 97.1%
(COST $12,580,490) (a) $13,864,188
CASH AND OTHER ASSETS
NET OF LIABILITIES - 2.9% 411,805
NET ASSETS - 100.0% $14,275,993
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$12,580,490, resulting in gross unrealized appreciation and
depreciation of $3,467,290 and $2,183,592, respectively, and net
unrealized appreciation of $1,283,698.
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
TOUCHSTONE EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Value
Shares (Note 1)
COMMON STOCKS - 92.5%
ADVERTISING - 0.6%
5,900 Advo* $ 247,800
--------------------------------------------------------
AUTOMOTIVE - 0.1%
6,200 Exide 49,600
--------------------------------------------------------
BANKING - 2.8%
1,800 Commerce Bancorp NJ 82,800
14,900 Dime Bancorp 234,675
38,500 East West Bancorp Inc. 553,438
15,300 Golden State Bancorp* 275,400
--------------------------------------------------------
1,146,313
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 0.2%
5,100 Ralcorp Holdings* 62,475
--------------------------------------------------------
BUILDING MATERIALS - 1.0%
24,900 Dal-Tile International* 205,425
5,300 Martin Marietta Materials 214,319
--------------------------------------------------------
419,744
--------------------------------------------------------
COMMERCIAL SERVICES - 15.1%
15,100 Administaff* 958,850
10,300 A.C. Nielson* 226,600
15,000 Career Education* 727,500
21,000 DeVry* 555,188
8,400 Diamond Technology Partners* 739,200
24,600 Forrester Research* 1,791,188
18,800 Media Metrix* 478,225
31,300 Stericycle* 751,200
6,800 Wallace Computer Services 67,150
--------------------------------------------------------
6,295,101
--------------------------------------------------------
COMMUNICATIONS - 9.8%
31,100 Advanced Fibre Communications* 1,409,219
7,400 Belden 189,625
2,400 Cable Design Technologies* 80,400
9,600 Carrier Access* 507,600
1,000 Commscope* 41,000
7,300 Ditech Communications* 690,306
8,700 Powerwave Technologies* 382,800
13,600 Tut Systems* 780,300
--------------------------------------------------------
4,081,250
--------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 5.7%
15,500 Natural MicroSystems* 1,742,781
21,000 Scientific Learning* 464,625
19,200 Ziff-Davis (ZDNet)* 172,800
--------------------------------------------------------
2,380,206
--------------------------------------------------------
COMPUTERS & INFORMATION - 0.5%
10,300 Gerber Scientific 118,450
13,200 Unova* 96,525
--------------------------------------------------------
214,975
--------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.7%
20,400 Magnetek* 163,200
9,400 Ucar International* 122,788
--------------------------------------------------------
285,988
--------------------------------------------------------
ELECTRONICS - 3.9%
2,400 Benchmark Electronics Inc.* 87,750
3,600 PerkinElmer 238,050
26,700 SmartForce, ADR* 1,281,600
--------------------------------------------------------
1,607,400
--------------------------------------------------------
Value
Shares (Note 1)
FINANCIAL SERVICES - 3.0%
34,400 Bedford Property Investors $ 638,550
23,700 Mack-Cali Realty Corp 608,794
--------------------------------------------------------
1,247,344
--------------------------------------------------------
FOOD RETAILERS - 0.3%
15,100 Pantry (The)* 139,675
--------------------------------------------------------
FOREST PRODUCTS & PAPER - 0.3%
8,915 Albany International* 129,268
--------------------------------------------------------
HEALTH CARE PROVIDERS - 7.6%
76,600 Hooper Holmes 612,800
17,510 Laboratory Corporation
of America Holdings* 1,350,459
16,400 Syncor International* 1,180,800
--------------------------------------------------------
3,144,059
--------------------------------------------------------
HEAVY CONSTRUCTION - 0.3%
12,200 Foster Wheeler 105,225
--------------------------------------------------------
HEAVY MACHINERY - 0.2%
3,100 Cuno Incorporated* 71,688
--------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 0.4%
3,800 Herman Miller 98,325
6,000 LA-Z-Boy Chair 84,000
--------------------------------------------------------
182,325
--------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.2%
8,000 Snap-on 213,000
5,400 Rayovac Corp* 120,825
7,000 Tupperware 154,000
--------------------------------------------------------
487,825
--------------------------------------------------------
INDUSTRIAL - DIVERSIFIED - 0.8%
2,300 Carlisle Companies 103,500
5,600 Roper Industries 143,500
8,400 Scitex* 92,925
--------------------------------------------------------
339,925
--------------------------------------------------------
INSURANCE - 1.3%
17,100 HCC Insurance Holdings 322,763
7,650 HSB Group 238,106
--------------------------------------------------------
560,869
--------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 7.1%
16,000 American Tower Systems, Class A* 667,000
5,200 Central Newspapers, Class A 328,900
8,600 Hollinger International 117,175
34,200 Information Holdings* 1,265,400
53,700 Sinclair Broadcast Group, Class A* 590,700
--------------------------------------------------------
2,969,175
--------------------------------------------------------
MEDICAL SUPPLIES - 8.3%
39,100 Advanced Neuromodulation
Systems* 654,925
20,000 Aradigm* 350,000
4,500 Arthocare* 239,625
22,400 Biosite Diagnostics* 1,079,400
24,500 Varian* 1,130,063
--------------------------------------------------------
3,454,013
--------------------------------------------------------
METALS - 0.8%
8,300 Harsco 211,650
9,700 Ryerson Tull 100,638
--------------------------------------------------------
312,288
--------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
TOUCHSTONE EMERGING GROWTH FUND
--------------------------------------------------------------------------------
Value
Shares (Note 1)
COMMON STOCKS - Continued
OIL & GAS - 13.2%
4,500 Equitable Resources $ 217,125
34,200 Hanover Compressor* 1,299,600
13,900 Helmerich & Payne 519,513
4,200 Nabors Industries* 174,563
33,400 Newpark Resources* 315,213
25,000 R&B Falcon* 589,063
60,100 Santa Fe Snyder* 683,630
10,700 Stolt Comex Seaway* 151,138
54,000 Superior Energy Services* 560,250
42,976 Varco International Inc.* 999,192
--------------------------------------------------------
5,509,287
--------------------------------------------------------
PHARMACEUTICALS - 5.2%
16,700 Albany Molecular Research* 909,106
15,100 ILEX Oncology* 532,275
17,100 Titan Pharmaceuticals* 735,300
--------------------------------------------------------
2,176,681
--------------------------------------------------------
REAL ESTATE - 0.4%
7,700 Prentiss Properties Trust, REIT 184,800
--------------------------------------------------------
RESTAURANTS - 0.3%
4,200 CEC Entertainment* 107,625
--------------------------------------------------------
Value
Shares (Note 1)
RETAILERS - 0.5%
4,750 BJ's Wholesale Club* $ 156,750
11,800 Enesco Group 56,050
--------------------------------------------------------
212,800
--------------------------------------------------------
TEXTILES, CLOTHING & FABRICS - 0.6%
20,600 Unifi* 254,925
--------------------------------------------------------
TRANSPORTATION - 0.3%
13,400 Fritz Companies* 138,188
--------------------------------------------------------
TOTAL COMMON STOCKS
(COST $25,748,645) $38,518,837
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 92.5%
(COST $25,748,645) (a) $38,518,837
CASH AND OTHER ASSETS
NET OF LIABILITIES - 7.5% 3,123,725
NET ASSETS - 100.0% $41,642,562
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$25,748,645, resulting in gross unrealized appreciation and
depreciation of $15,358,603 and $2,588,411, respectively, and net
unrealized appreciation of $12,770,192.
ADR - American Depository Receipt
REIT - Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
TOUCHSTONE INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Value
Shares (Note 1)
COMMON STOCKS - 98.8%
AUSTRALIA - 2.0%
11,522 Broken Hill Proprietary $ 136,103
45,100 Cable & Wireless Optus* 134,332
14,595 Lend Lease 186,003
10,262 News Corporation Limited (The) 141,167
24,937 Westpac Banking 179,724
--------------------------------------------------------
777,329
--------------------------------------------------------
FINLAND - 3.4%
15,803 Nokia Oyj 808,181
6,888 Sonera Group 314,693
7,972 UPM-Kymmene 198,318
--------------------------------------------------------
1,321,192
--------------------------------------------------------
FRANCE - 17.0%
10,743 Alcatel 706,161
11 Aventis 805
2,869 AXA 452,935
9,460 Banque Nationale de Paris 912,374
1,397 Canal Plus 235,250
1,047 Cap Gemini SA-New* 184,826
3,196 Groupe Danone 425,053
2,564 Pinault-Printemps-Redoute 570,868
6,477 Renault 294,986
12,774 STMicroelectronics* 806,663
1,710 Suez Lyonnaise Des Eaux-Dumex 300,229
7,349 Total Fina, B 1,129,263
5,929 Vivendi 524,457
--------------------------------------------------------
6,543,870
--------------------------------------------------------
GERMANY - 9.0%
4,571 Bayerische Vereinsbank 297,838
14,328 Deutsche Bank 1,184,460
2,325 Deutsche Telekom 132,584
4,551 E.On 223,816
2,189 Muenchener Rueckversicherungs-
Gasellschaft 696,400
6,121 Preussag 197,952
1,677 SAP 247,743
3,292 Siemens 496,091
--------------------------------------------------------
3,476,884
--------------------------------------------------------
GREAT BRITAIN - 13.3%
47,935 BP Amoco 459,995
32,789 British Telecommunications 423,835
16,799 Glaxo Wellcome 489,978
47,946 Legal & General Group 112,122
27,466 Lloyds TSB Group 259,413
34,427 Marconi 448,135
13,115 Peninsular and Oriental Steam
Navigation 112,356
11,868 Reuters Group 202,448
70,195 Shell Transport & Trading 585,953
36,102 SmithKline Beecham 472,670
333,554 Vodafone Group 1,347,996
14,150 WPP Group 206,678
--------------------------------------------------------
5,121,579
--------------------------------------------------------
HONG KONG - 0.0%
57 Sunevision Holdings* 46
--------------------------------------------------------
Value
Shares (Note 1)
ITALY - 4.5%
19,405 Assicurazione Generali $ 667,473
33,430 Concessioni e Costruzioni
Autostrade 248,850
26,429 Istituto Bancario San Paolo
di Torino 469,585
87,235 Tecnost* 331,362
--------------------------------------------------------
1,717,270
--------------------------------------------------------
JAPAN - 29.1%
10,000 Ajinomoto 128,229
19,000 Bank of Tokyo 229,483
3,000 Bridgestone 63,502
5,000 Canon 248,916
8,000 Chugai Pharmaceutical 151,235
7,000 Dai Nippon Printing 123,355
11,000 Daikin Industries 255,657
9,000 Daiwa Securities 118,801
47 DDI 452,008
9,000 Denso 218,933
1,200 Fanuc 122,082
14,000 Fuji Bank Limited (The) 106,393
3,839 Fuji Photo Film 157,093
10 Fuji Television Network 156,515
2,000 Fujisawa Pharmaceutical 80,898
8,000 Fujitsu 276,824
12,000 Fukuyama Transporting 75,240
6,400 Hitachi Credit 173,185
8,000 Hitachi 115,406
6,000 House Foods 92,778
2,900 ITO Yokado 174,448
14,000 Kaneka 154,309
3,000 Kao 91,646
11,000 Kirin Brewery 137,422
52,000 Kubota 188,761
2,100 Kyocera 356,204
7,000 Marui 133,981
1,000 Matsushita Communication
Industrial 116,726
10,000 Matsushita Electric 259,287
13,000 Mitsubishi 117,547
19,500 Mitsui Chemicals 136,239
1,000 Murata Manufacturing 143,504
6,000 NEC 188,384
11,000 Nikko Securities Co. (The) 108,901
600 Nintendo 105,223
9,000 Nippon Meat Packers 131,529
23 Nippon Telegraph & Telephone 305,770
3,900 Nissin Food Products 99,283
16 NTT Data 164,435
12 NTT Mobile Communication
Network 324,722
5,000 Olympus Optical 89,619
6,000 Omron 162,927
2,100 Orix 309,872
2,000 Pioneer Corp 77,880
600 Rohm Company 175,372
23,000 Sakura Bank 158,957
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
TOUCHSTONE INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
Value
Shares (Note 1)
COMMON STOCKS - Continued
JAPAN - Continued
8,000 Sanwa Bank (The) $ 63,813
1,000 Secom 73,072
1,000 Seven-Eleven Japan 83,632
4,000 Shin-Etsu Chemical 202,904
900 SMC 169,291
100 Softbank 13,577
600 Softbank, New* 89,383
1,200 Sony 112,012
19,000 Sumitomo Bank 232,887
25,000 Sumitomo Chemical 150,387
7,000 Sumitomo Electric Industries 119,989
19,000 Sumitomo Trust & Banking 135,254
2,000 Taisho Pharmaceutical 71,658
4,000 Takara Shuzo Company Ltd. 99,755
2,000 Takeda Chemical Industries 131,246
400 TDK 57,477
3,000 Terumo 101,546
6,000 Tokio Marine & Fire Insurance 69,244
6,000 Tokyo Broadcasting System 259,099
2,400 Tokyo Electric Power 58,495
18,000 Toshiba 203,149
5,000 Tostem 81,558
10,000 Toyota Motor 455,403
1,500 WORLD 66,642
8,000 Yakult Honsha 106,279
3,000 Yamanouchi Pharmaceutical 163,775
3,000 Yamato Transport 74,533
--------------------------------------------------------
11,205,541
--------------------------------------------------------
MEXICO - 0.0%
75 Cemex SA de CV, ADR 1,742
--------------------------------------------------------
NETHERLANDS - 8.1%
4,621 Akzo Nobel 196,751
7,917 Fortis 230,961
10,002 Ing Groep 677,550
9,899 Koninklijke Ahold 292,002
4,148 Koninklijke KPN 185,939
2,390 Koninklijke Numico 113,652
2,213 KPN* 0
19,036 Philips Electronics 899,754
5,135 United Pan Europe Communications* 134,572
3,971 Verenigde Nederlandse 205,550
15,735 World Online International* 189,696
--------------------------------------------------------
3,126,427
--------------------------------------------------------
PORTUGAL - 0.5%
18,350 Portugal Telecom 206,472
1 PT Multimedia - Servicos
de Tele-comunicaceous
e Multimedia SGPS* 50
--------------------------------------------------------
206,522
--------------------------------------------------------
Value
Shares (Note 1)
SPAIN - 2.8%
36,420 Banco Santander
Central Hispano $ 385,056
32,401 Telefonica * 697,529
--------------------------------------------------------
1,082,585
--------------------------------------------------------
SWEDEN - 2.4%
30,129 Ericsson LM-B 597,784
12,943 Skandia Forsakrings 342,890
--------------------------------------------------------
940,674
--------------------------------------------------------
SWITZERLAND - 5.6%
2,312 ABB 277,216
36 Givaudan* 10,976
118 Nestle 236,594
243 Novartis 385,601
38 Roche Holding 370,572
3,518 Union Bank of Switzerland 516,336
734 Zurich Allied 363,304
--------------------------------------------------------
2,160,599
--------------------------------------------------------
TAIWAN - 0.3%
2,560 Taiwan Semiconductor
Manufacturing, ADR* 99,200
--------------------------------------------------------
TOTAL COMMON STOCKS
(COST $35,262,049) $37,781,460
--------------------------------------------------------
PREFERRED STOCKS - 0.8%
GERMANY - 0.8%
1,593 SAP, Preferred $ 294,929
--------------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $240,906) $ 294,929
--------------------------------------------------------
WARRANTS - 0.0%
FRANCE - 0.0%
1,059 Banque Nationale
de Paris, Warrants* $ 5,472
--------------------------------------------------------
TOTAL WARRANTS (COST $0) $ 5,472
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 98.8%
(COST $35,502,955) (a) $38,081,861
CASH AND OTHER ASSETS
NET OF LIABILITIES - 1.2% 448,439
NET ASSETS - 100.0% $38,530,300
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$35,502,955, resulting in gross unrealized appreciation and
depreciation of $5,145,471 and $2,566,565, respectively, and net
unrealized appreciation of $2,578,906.
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
TOUCHSTONE INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
Schedule of Investments continued
Industry sector diversification of the International Equity Fund's investments
as a percentage of net assets as of June 30, 2000 was as follows:
Industry Percentage
Sector Net Assets
Banking 15.1%
Communications 9.6%
Telephone Systems 8.8%
Electronics 6.9%
Pharmaceuticals 6.0%
Electrical Equipment 5.9%
Oil & Gas 5.7%
Commercial Services 5.4%
Insurance 5.0%
Beverages, Food & Tobacco 3.8%
Financial Services 3.2%
Media - Broadcasting & Publishing 3.1%
Chemicals 2.6%
Automotive 2.5%
Retailers 2.5%
Multiple Utilities 2.3%
Heavy Machinery 2.3%
Computer Software & Processing 1.9%
Transportation 1.8%
Food Retailers 1.1%
Entertainment & Leisure 0.9%
Advertising 0.5%
Forest Products & Paper 0.5%
Mining 0.3%
Industrial - Diversified 0.3%
Medical Supplies 0.3%
Metals 0.2%
Textiles, Clothing & Fabrics 0.2%
Electric Utilities 0.1%
Building Materials 0.0%
Other Assets in Excess of Liabilities 1.2%
------------------------------------------------------
100.00%
------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
TOUCHSTONE INCOME OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE DEBT - 42.8%
AEROSPACE & DEFENSE - 1.3%
$ 500,000 Pacific Aerospace
& Electronics 11.25% 08/01/05 $ 280,000
--------------------------------------------------------
COMMUNICATIONS - 16.6%
500,000 Charter
Communications
Holdings 8.625% 04/01/09 439,375
550,000 Global Crossing
Holdings Ltd. 9.125% 11/15/06 526,625
750,000 McLeod
USA Inc. 8.125% 02/15/09 676,875
750,000 Netia Holdings,
Series B, 144A 13.125% 06/15/09 712,500
700,000 Nextel Com-
munications 9.375% 11/15/09 668,500
200,000 Northeast Optic
Network 12.75% 08/15/08 191,000
500,000 United Pan-
Europe Com-
munications 11.25% 11/01/09 440,000
--------------------------------------------------------
3,654,875
--------------------------------------------------------
ELECTRIC UTILITIES - 2.2%
500,000 AES Corporation
(The) 9.50% 06/01/09 490,000
--------------------------------------------------------
FOREST PRODUCTS & PAPER - 2.2%
500,000 Riverwood
International 10.25% 04/01/06 480,000
--------------------------------------------------------
HEALTH CARE PROVIDERS - 3.1%
750,000 Tenet
Healthcare
Corp 8.125% 12/01/08 686,250
--------------------------------------------------------
HEAVY MACHINERY - 4.4%
700,000 Generac
Portable
Products 11.25% 07/01/06 560,000
750,000 Pentacon,
Series B 12.25% 04/01/09 412,500
--------------------------------------------------------
972,500
--------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 3.1%
750,000 Classic Cable 10.50% 03/01/10 691,875
--------------------------------------------------------
OIL & GAS - 2.3%
500,000 Western Gas
Resources 10.00% 06/15/09 516,250
--------------------------------------------------------
TELEPHONE SYSTEMS - 7.6%
350,000 Exodus
Communications,
144A 11.625% 07/15/10 351,750
500,000 Level 3
Communications,
144A 11.00% 03/15/08 495,000
500,000 Metromedia
Fiber Network 10.00% 12/15/09 492,500
Principal Interest Maturity Value
Amount Rate Date (Note 1)
TELEPHONE SYSTEMS - Continued
$ 350,000 Winstar
Communications,
144A 12.50% 04/15/08 $ 343,000
--------------------------------------------------------
1,682,250
--------------------------------------------------------
TOTAL CORPORATE DEBT
(COST $10,328,097) $ 9,454,000
--------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 41.8%
ARGENTINA - 3.4%
$ 834,000 Republic of
Argentina 11.75% 06/15/15 $ 754,770
--------------------------------------------------------
BRAZIL - 9.0%
1,200,000 Republic of
Brazil 11.625% 04/15/04 1,212,000
1,000,000 Republic of
Brazil, Brady
Bond, FRB 7.375% 04/15/24 790,000
--------------------------------------------------------
2,002,000
--------------------------------------------------------
BULGARIA - 3.6%
1,000,000 Government of
Bulgaria, Series A,
Brady Bond,
FRB 7.063% 07/28/24 790,000
--------------------------------------------------------
COLOMBIA - 2.7%
750,000 Republic of
Colombia 9.75% 04/23/09 588,750
--------------------------------------------------------
MEXICO - 8.1%
950,000 United Mexican
States 10.375% 02/17/09 1,007,000
750,000 United Mexican
States 9.875% 02/01/10 776,250
--------------------------------------------------------
1,783,250
--------------------------------------------------------
PERU - 1.4%
500,000 Republic of Peru,
Brady Bond,
FLIRB, VRB 3.75% 03/07/17 302,500
--------------------------------------------------------
PHILIPPINE ISLANDS - 4.9%
500,000 Republic of
Philippines 10.625% 03/16/25 427,500
800,000 Republic of
Philippines 9.875% 01/15/19 654,000
--------------------------------------------------------
1,081,500
--------------------------------------------------------
RUSSIA - 3.0%
850,000 Russian
Federation,
Euro-Dollar 8.75% 07/24/05 656,022
--------------------------------------------------------
TURKEY - 3.5%
750,000 Republic of
Turkey 11.75% 06/15/10 766,875
--------------------------------------------------------
VENEZUELA - 2.2%
750,000 Venezuela 9.25% 09/15/27 494,063
--------------------------------------------------------
TOTAL GOVERNMENT OBLIGATIONS
(COST $8,798,844) $ 9,219,730
--------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
TOUCHSTONE INCOME OPPORTUNITY FUND
--------------------------------------------------------------------------------
Schedule of Investments continued
Principal Interest Maturity Value
Amount Rate Date (Note 1)
WARRANTS - 0.1%
TELEPHONE SYSTEMS - 0.1%
$ 400 Loral Space &
Communications,
Warrants* 0.00% $ 1,600
300 Primus Tele-
communications
Group,
Warrants* 0.00% 9,224
--------------------------------------------------------
10,824
--------------------------------------------------------
TOTAL WARRANTS (COST $0) $ 10,824
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 84.7%
(COST $19,126,941) (a) $18,684,554
CASH AND OTHER ASSETS
NET OF LIABILITIES - 15.3% 3,383,213
NET ASSETS - 100.0% $22,067,767
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$19,126,941, resulting in gross unrealized appreciation and
depreciation of $834,099 and $1,276,486, respectively, and net
unrealized depreciation of $442,387.
144A - Security exempt from registration under Rule 144A of the Securities
Act of 1933. The security may be sold in transactions exempt from
registration, normally to qualified institutional buyers.
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.
Euro-Dollar - Bonds issued offshore that pay interest and principal in U.S.
dollars.
FLIRB - Front-Load Interest Reduction Bonds
FRB - Floating Rate Bond
VRB - Variable Rate Bond
10
<PAGE>
TOUCHSTONE HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CONVERTIBLE DEBT - 3.1%
HEALTH CARE PROVIDERS - 1.8%
$ 425,000 Omnicare 5.00% 12/01/07 $ 285,813
--------------------------------------------------------
LODGING - 1.3%
250,000 Hilton Hotels,
Convertible 5.00% 05/15/06 197,500
--------------------------------------------------------
TOTAL CONVERTIBLE DEBT
(COST $500,107) $ 483,313
--------------------------------------------------------
CORPORATE DEBT - 94.0%
AEROSPACE & DEFENSE - 0.3%
$ 50,000 BE Aerospace 9.875% 02/01/06 $ 47,500
--------------------------------------------------------
AUTOMOTIVE - 4.8%
500,000 Accuride,
Series B 9.25% 02/01/08 420,000
250,000 Federal-Mogul 7.375% 01/15/06 181,814
150,000 Navistar
International,
Series B 8.00% 02/01/08 137,625
--------------------------------------------------------
739,439
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 1.4%
250,000 Dole Food 6.375% 10/01/05 209,453
--------------------------------------------------------
CHEMICALS - 3.2%
500,000 Lyondell
Chemical,
Series B 9.875% 05/01/07 493,750
--------------------------------------------------------
COMMERCIAL SERVICES - 6.9%
500,000 Allied Waste
North America 10.00% 08/01/09 417,500
500,000 Rural/Metro 7.875% 03/15/08 210,000
500,000 United Rentals,
Series B 8.80% 08/15/08 440,000
--------------------------------------------------------
1,067,500
--------------------------------------------------------
COMMUNICATIONS - 10.0%
500,000 Charter
Communications
Holdings 8.625% 04/01/09 439,375
40,000 Crown Castle
International
Towers 10.75% 08/01/11 40,550
250,000 Nextel Com-
munications 9.375% 11/15/09 238,750
500,000 Pinnacle
Holdings,
Step Bond (b) 0.00% 03/15/08 345,000
500,000 Williams
Communications
Group 10.875% 10/01/09 488,750
--------------------------------------------------------
1,552,425
--------------------------------------------------------
COSMETICS & PERSONAL CARE - 1.2%
250,000 Revlon
Consumer
Products 9.00% 11/01/06 180,000
--------------------------------------------------------
ELECTRIC UTILITIES - 3.0%
500,000 AES 8.50% 11/01/07 456,250
--------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ELECTRICAL EQUIPMENT - 2.6%
$ 500,000 Integrated
Electrical
Services,
Series B 9.375% 02/01/09 $ 405,000
--------------------------------------------------------
ELECTRONICS - 1.6%
250,000 Flextronics
International,
144A 9.875% 07/01/10 254,375
--------------------------------------------------------
FINANCIAL SERVICES - 2.0%
295,000 Orion Power
Holdings, 144A 12.00% 05/01/10 305,325
--------------------------------------------------------
FOOD RETAILERS - 4.4%
500,000 Marsh
Supermarkets,
Series B 8.875% 08/01/07 465,000
250,000 Stater Brothers
Holdings 10.75% 08/15/06 220,000
--------------------------------------------------------
685,000
--------------------------------------------------------
FOREST PRODUCTS & PAPER - 8.7%
500,000 Delta Mills,
Series B 9.625% 09/01/07 420,000
500,000 Republic Group 9.50% 07/15/08 415,000
500,000 Tembec Finance,
Yankee Dollar 9.875% 09/30/05 502,500
--------------------------------------------------------
1,337,500
--------------------------------------------------------
HEALTH CARE PROVIDERS - 4.5%
200,000 Columbia/HCA
Healthcare 7.00% 07/01/07 177,060
500,000 LifePoint
Hospitals
Holdings,
Series B 10.75% 05/15/09 515,000
--------------------------------------------------------
692,060
--------------------------------------------------------
HEAVY MACHINERY - 0.2%
30,000 AGCO 8.50% 03/15/06 27,563
--------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 2.3%
200,000 Armstrong
World 6.35% 08/15/03 176,178
200,000 Kaufman &
Broad Home 7.75% 10/15/04 181,000
--------------------------------------------------------
357,178
--------------------------------------------------------
HOUSING - 3.0%
500,000 Champion
Enterprises,
144A 7.625% 05/15/09 455,552
--------------------------------------------------------
INSURANCE - 2.7%
500,000 Willis Corroon 9.00% 02/01/09 420,000
--------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 11.0%
250,000 Alliance Atlantis
Communications,
Yankee Dollar 13.00% 12/15/09 256,250
500,000 American Lawyer
Media, Series B 9.75% 12/15/07 456,250
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
TOUCHSTONE HIGH YIELD FUND
--------------------------------------------------------------------------------
Schedule of Investments continued
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE DEBT - Continued
MEDIA - BROADCASTING & PUBLISHING - Continued
$ 500,000 Chancellor
Media 9.00% 10/01/08 $ 515,000
500,000 Susquehanna
Media 8.50% 05/15/09 475,000
--------------------------------------------------------
1,702,500
--------------------------------------------------------
OIL & GAS - 9.9%
500,000 HS Resources 9.25% 11/15/06 486,250
100,000 Husky Oil 8.90% 08/15/28 94,089
400,000 Pioneer Natural
Resources 9.625% 04/01/10 413,052
500,000 RBF Finance 11.375% 03/15/09 542,500
--------------------------------------------------------
1,535,891
--------------------------------------------------------
RESTAURANTS - 2.2%
500,000 Advantica
Restaurant
Group 11.25% 01/15/08 335,000
--------------------------------------------------------
TRANSPORTATION - 2.0%
350,000 Stena,
Yankee Dollar 8.75% 06/15/07 305,375
--------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
TELEPHONE SYSTEMS - 6.1%
$ 500,000 Level 3 Com-
munications 9.125% 05/01/08 $ 448,750
350,000 Primus Telecom-
munications
Group 11.25% 01/15/09 273,000
250,000 Sprint Capital 6.875% 11/15/28 216,270
--------------------------------------------------------
938,020
--------------------------------------------------------
TOTAL CORPORATE DEBT
(COST $15,778,994) $14,502,656
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 97.1%
(COST $16,279,101) (a) $14,985,969
CASH AND OTHER ASSETS
NET OF LIABILITIES - 2.9% 449,356
NET ASSETS - 100.0% $15,435,325
--------------------------------------------------------
Notes to the Schedule of Investments:
(a) The aggregate identified cost for federal income tax purposes is
$16,279,101, resulting in gross unrealized appreciation and
depreciation of $92,167 and $1,385,299, respectively, and net
unrealized depreciation of $1,293,132.
(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.
12
<PAGE>
TOUCHSTONE VALUE PLUS FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Value
Shares (Note 1)
COMMON STOCKS - 95.1%
ADVERTISING - 1.7%
2,725 Interpublic Group
of Companies (The) $ 117,175
--------------------------------------------------------
AEROSPACE & DEFENSE - 1.5%
3,050 Honeywell International 102,747
--------------------------------------------------------
AUTOMOTIVE - 2.1%
2,975 Magna International, Class A 140,569
--------------------------------------------------------
BANKING - 6.1%
1,875 Chase Manhattan 86,367
2,987 Citigroup 179,967
5,025 North Fork Bancorporation 76,003
3,800 US Bancorp 73,150
--------------------------------------------------------
415,487
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 5.0%
2,975 McCormick & Company 96,688
3,975 Pepsico 176,639
3,300 Ralston-Ralston Purina Group 65,794
--------------------------------------------------------
339,121
--------------------------------------------------------
BUILDING MATERIALS - 1.8%
6,725 Masco 121,470
--------------------------------------------------------
CHEMICALS - 1.4%
2,100 Du Pont (E.I.) De Nemours 91,875
--------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 5.7%
6,500 Ceridian* 156,406
2,575 Computer Associates International 131,808
2,545 Compuware* 26,404
1,425 First Data 70,716
--------------------------------------------------------
385,334
--------------------------------------------------------
COMPUTERS & INFORMATION - 12.5%
3,800 Gateway* 215,650
1,450 Hewlett-Packard 181,069
1,450 International Business Machines 158,866
2,575 Lexmark International Group,
Class A* 173,169
1,300 Sun Microsystems* 118,219
--------------------------------------------------------
846,973
--------------------------------------------------------
ELECTRIC UTILITIES - 3.1%
3,500 Alliant Energy 91,000
5,500 CMS Energy 121,688
--------------------------------------------------------
212,688
--------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.3%
553 Agilent Technologies* 40,784
1,800 Emerson Electric 108,675
1,100 Nortel Networks Corp 75,075
--------------------------------------------------------
224,534
--------------------------------------------------------
ELECTRONICS - 4.9%
1,925 Intel 257,348
800 Applied Materials* 72,500
--------------------------------------------------------
329,848
--------------------------------------------------------
FINANCIAL SERVICES - 4.4%
2,525 Federal National Mortgage
Association 131,773
4,550 SLM Holding 170,341
--------------------------------------------------------
302,114
--------------------------------------------------------
FOOD RETAILERS - 1.5%
3,077 Albertson's 102,310
--------------------------------------------------------
Value
Shares (Note 1)
FOREST PRODUCTS & PAPER - 1.8%
4,775 Mead $ 120,569
--------------------------------------------------------
HEALTH CARE PROVIDERS - 0.2%
1,900 Manor Care* 13,300
--------------------------------------------------------
HEAVY MACHINERY - 1.2%
2,075 Ingersoll-Rand 83,519
--------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 1.1%
1,375 General Electric 72,875
--------------------------------------------------------
HOUSEHOLD PRODUCTS - 3.4%
4,075 Kimberly-Clark 233,803
--------------------------------------------------------
INSURANCE - 3.4%
1,925 AXA Financial 65,450
3,175 Reliastar Financial 166,489
--------------------------------------------------------
231,939
--------------------------------------------------------
MEDICAL SUPPLIES - 2.5%
2,400 Baxter International 168,750
--------------------------------------------------------
OIL & GAS - 9.6%
6,300 Conoco, Class A 138,600
1,673 Exxon Mobil 131,331
1,600 Schlumberger 119,400
3,150 Tosco 89,184
1,929 Transocean Sedco Forex 103,081
1,700 Williams Companies (The) 70,869
--------------------------------------------------------
652,465
--------------------------------------------------------
PHARMACEUTICALS - 7.6%
3,225 Abbott Laboratories 143,712
1,950 Cardinal Health 144,300
1,650 Merck 126,431
2,000 Schering-Plough 101,000
--------------------------------------------------------
515,443
--------------------------------------------------------
RETAILERS - 1.8%
1,950 Federated Department Stores* 65,813
9,725 Office Depot* 60,781
--------------------------------------------------------
126,594
--------------------------------------------------------
TELEPHONE SYSTEMS - 6.9%
1,600 Alltel 99,100
1,775 Bell Atlantic 90,192
2,900 Broadwing* 75,219
2,775 SBC Communications 120,019
1,700 Sprint 86,700
--------------------------------------------------------
471,230
--------------------------------------------------------
TRANSPORTATION - 0.6%
1,750 US Freightways 42,984
--------------------------------------------------------
TOTAL COMMON STOCKS
(COST $6,515,938) $ 6,465,716
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 95.1%
(COST $6,515,938) (A) $ 6,465,716
CASH AND OTHER ASSETS
NET OF LIABILITIES - 4.9% 332,611
NET ASSETS - 100.0% $ 6,798,327
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$6,515,938, resulting in gross unrealized appreciation and
depreciation of $793,628 and $843,850 respectively, and net unrealized
depreciation of $50,222.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
TOUCHSTONE GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Value
Shares (Note 1)
COMMON STOCKS - 96.1%
AEROSPACE & DEFENSE - 6.3%
24,500 Boeing $ 1,024,406
49,200 Lockheed Martin 1,220,775
9,300 Northrop Grumman 616,125
16,100 Rockwell International 507,150
--------------------------------------------------------
3,368,456
--------------------------------------------------------
BANKING - 12.0%
17,600 Bank of America 756,800
19,900 Bank One 528,594
13,500 Chase Manhattan 621,844
37,000 Citigroup 2,229,250
23,200 FleetBoston Financial 788,800
21,200 PNC Bank 993,750
25,300 US Bancorp 487,025
--------------------------------------------------------
6,406,063
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 3.8%
15,700 Diageo, ADR 558,331
33,500 Pepsico 1,488,656
--------------------------------------------------------
2,046,987
--------------------------------------------------------
CHEMICALS - 3.0%
15,101 Du Pont (E.I.) De Nemours 660,669
18,463 Pharmacia 954,306
--------------------------------------------------------
1,614,975
--------------------------------------------------------
COMMERCIAL SERVICES - 1.8%
25,100 Unicom 971,056
--------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 4.1%
25,900 Cadence Design Systems* 527,713
23,800 Computer Associates International 1,218,263
28,500 Unisys* 415,031
--------------------------------------------------------
2,161,007
--------------------------------------------------------
COMPUTERS & INFORMATION - 2.2%
36,500 Compaq Computer 933,031
9,500 Diebold Inc. 264,813
--------------------------------------------------------
1,197,844
--------------------------------------------------------
COSMETICS & PERSONAL CARE - 2.8%
17,500 Avon Products 778,750
15,400 Clorox 690,113
--------------------------------------------------------
1,468,863
--------------------------------------------------------
ELECTRIC UTILITIES - 3.4%
12,000 FPL Group 594,000
10,500 PECO Energy 423,281
14,200 PG & E 349,675
12,732 ScottishPower, ADR 425,726
--------------------------------------------------------
1,792,682
--------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.4%
8,100 Eaton 542,700
12,500 Emerson Electric 754,688
--------------------------------------------------------
1,297,388
--------------------------------------------------------
ELECTRONICS - 3.2%
23,600 Koninklijke (Royal) Philips
Electronics (NY Reg.) 1,121,000
6,600 Micron Technology* 581,213
--------------------------------------------------------
1,702,213
--------------------------------------------------------
ENTERTAINMENT & LEISURE - 1.0%
13,800 Walt Disney Company (The) 535,613
--------------------------------------------------------
Value
Shares (Note 1)
FINANCIAL SERVICES - 4.5%
19,600 Federal National Mortgage
Association $ 1,022,875
2,600 J.P. Morgan 286,325
5,400 Lehman Brothers Holdings 510,638
6,700 Morgan Stanley Dean Witter 557,775
--------------------------------------------------------
2,377,613
--------------------------------------------------------
FOOD RETAILERS - 0.7%
10,526 Albertson's 349,990
--------------------------------------------------------
HEAVY MACHINERY - 1.4%
21,100 Parker Hannifin 722,675
--------------------------------------------------------
HOUSEHOLD PRODUCTS - 1.2%
18,700 Rohm & Haas 645,150
--------------------------------------------------------
INSURANCE - 6.8%
9,500 American International Group 1,116,250
25,700 Lincoln National 928,413
7,400 Marsh & McLennan Companies 772,838
24,400 St. Paul Companies (The) 832,650
--------------------------------------------------------
3,650,151
--------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 1.9%
19,000 McGraw-Hill Companies (The) 1,026,000
--------------------------------------------------------
MEDICAL SUPPLIES - 1.3%
23,600 Becton Dickinson & Company 677,025
--------------------------------------------------------
METALS - 1.3%
23,600 Alcoa 684,400
--------------------------------------------------------
OIL & GAS - 14.0%
16,400 Burlington Resources 627,300
20,900 Conoco, Class A 459,800
33,121 Exxon Mobil 2,599,999
14,200 Royal Dutch Petroleum 874,188
8,000 Schlumberger 597,000
13,044 Total Fina S.A., ADR 1,001,942
17,100 Texaco 910,575
8,900 Williams Companies (The) 371,019
--------------------------------------------------------
7,441,823
--------------------------------------------------------
PHARMACEUTICALS - 2.8%
15,900 Abbott Laboratories 708,544
13,200 Bristol-Myers Squibb 768,900
--------------------------------------------------------
1,477,444
--------------------------------------------------------
RETAILERS - 1.2%
11,300 Target 655,400
--------------------------------------------------------
TELEPHONE SYSTEMS - 11.6%
36,400 AT&T 1,151,150
27,900 Bell Atlantic 1,417,663
22,100 Bellsouth 942,013
7,700 GTE 479,325
35,902 SBC Communications 1,552,762
13,000 Sprint 663,000
--------------------------------------------------------
6,205,913
--------------------------------------------------------
TRANSPORTATION - 1.4%
26,300 Canadian National Railway 767,631
--------------------------------------------------------
TOTAL COMMON STOCKS
(COST $52,720,611) $51,244,362
--------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
TOUCHSTONE GROWTH & INCOME FUND
--------------------------------------------------------------------------------
Value
Shares (Note 1)
CONVERTIBLE PREFERRED STOCKS - 1.3%
MEDIA - BROADCASTING & PUBLISHING - 1.3%
16,700 MediaOne Group,
Convertible Preferred $ 676,350
--------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $850,152) $ 676,350
--------------------------------------------------------
PREFERRED STOCKS - 1.9%
MEDIA - BROADCASTING & PUBLISHING - 1.9%
21,700 News Corporation Limited
(The), ADR Preferred $ 1,030,750
--------------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $878,782) $ 1,030,750
--------------------------------------------------------
Value
Shares (Note 1)
TOTAL INVESTMENTS AT MARKET VALUE - 99.3%
(COST $54,449,541) (a) $52,951,462
CASH AND OTHER ASSETS
NET OF LIABILITIES - 0.7% 347,830
NET ASSETS - 100.0% $53,299,292
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$54,449,541, resulting in gross unrealized appreciation and
depreciation of $4,221,709 and $5,719,788, respectively, and net
unrealized depreciation of $1,498,079.
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
TOUCHSTONE ENHANCED 30 FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Value
Shares (Note 1)
COMMON STOCKS - 98.9%
AEROSPACE & DEFENSE - 6.7%
10,900 Boeing $ 455,756
11,400 Honeywell International 384,038
--------------------------------------------------------
839,794
--------------------------------------------------------
BANKING - 5.9%
8,100 Bank of America 348,300
6,500 Citigroup 391,625
--------------------------------------------------------
739,925
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 6.0%
6,900 Coca-Cola 396,319
10,600 McDonald's 349,138
--------------------------------------------------------
745,457
--------------------------------------------------------
BUILDING MATERIALS - 3.4%
8,600 Home Depot 429,463
--------------------------------------------------------
CHEMICALS - 3.2%
9,200 Du Pont (E.I.) De Nemours 402,500
--------------------------------------------------------
COMMUNICATIONS - 3.4%
7,100 Lucent Technologies 420,675
--------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 3.8%
5,900 Microsoft* 472,000
--------------------------------------------------------
COMPUTERS & INFORMATION - 10.7%
6,900 Cisco Systems* 438,581
3,700 Hewlett-Packard 462,038
4,000 International Business Machines 438,250
--------------------------------------------------------
1,338,869
--------------------------------------------------------
ELECTRONICS - 3.8%
3,500 Intel 467,906
--------------------------------------------------------
ENTERTAINMENT & LEISURE - 3.1%
10,000 Walt Disney Company (The) 388,125
--------------------------------------------------------
FINANCIAL SERVICES - 6.3%
7,830 American Express 408,139
3,470 J.P. Morgan 382,134
--------------------------------------------------------
790,273
--------------------------------------------------------
FOREST PRODUCTS & PAPER - 3.0%
6,600 Kimberly-Clark 378,675
--------------------------------------------------------
Value
Shares (Note 1)
HEAVY MACHINERY - 3.4%
7,200 United Technologies $ 423,900
--------------------------------------------------------
HOME CONSTRUCTION, FURNISHINGS & APPLIANCES - 3.2%
7,600 General Electric 402,800
--------------------------------------------------------
INDUSTRIAL - DIVERSIFIED - 3.0%
4,600 Minnesota Mining &
Manufacturing (3M) 379,500
--------------------------------------------------------
MEDICAL SUPPLIES - 3.8%
4,700 Johnson & Johnson 478,813
--------------------------------------------------------
OIL & GAS - 6.3%
8,200 El Paso Energy Corp 417,688
4,648 Exxon Mobil 364,868
--------------------------------------------------------
782,556
--------------------------------------------------------
PHARMACEUTICALS - 10.6%
10,500 Abbott Laboratories 467,905
5,400 Merck 413,774
9,200 Pfizer 441,599
--------------------------------------------------------
1,323,278
--------------------------------------------------------
RETAILERS - 3.4%
7,400 Wal-Mart Stores 426,425
--------------------------------------------------------
TELEPHONE SYSTEMS - 5.9%
9,000 SBC Communications 389,250
6,900 Sprint 351,900
--------------------------------------------------------
741,150
--------------------------------------------------------
TOTAL COMMON STOCKS
(COST $11,888,694) $12,372,084
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 98.9%
(COST $11,888,694) (A) $12,372,084
CASH AND OTHER ASSETS
NET OF LIABILITIES - 1.1% 135,677
NET ASSETS - 100.0% $12,507,761
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$11,888,694, resulting in gross unrealized appreciation and
depreciation of $1,434,075 and $950,685, respectively, and net
unrealized appreciation of $483,390.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
TOUCHSTONE BALANCED FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Value
Shares (Note 1)
COMMON STOCKS - 51.9%
ADVERTISING - 2.7%
6,400 Lamar Advertising* $ 277,200
3,300 WPP Group 239,663
6,500 Young & Rubicam 371,719
--------------------------------------------------------
888,582
--------------------------------------------------------
AEROSPACE & DEFENSE - 2.1%
6,500 Boeing 271,781
8,600 Rockwell International 270,900
2,500 Textron 135,781
--------------------------------------------------------
678,462
--------------------------------------------------------
AIRLINES - 0.3%
3,700 AMR* 97,819
--------------------------------------------------------
BANKING - 4.9%
5,850 Chase Manhattan 269,466
6,200 Citigroup 373,550
9,448 FleetBoston Financial 321,232
7,500 Household International 311,719
8,800 Wells Fargo 341,000
--------------------------------------------------------
1,616,967
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 1.1%
11,400 McDonald's 375,488
--------------------------------------------------------
CHEMICALS - 1.9%
7,500 Du Pont (E.I.) De Nemours 328,125
5,900 Pharmacia 304,956
--------------------------------------------------------
633,081
--------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 1.4%
8,900 Computer Associates International 455,569
--------------------------------------------------------
COSMETICS & PERSONAL CARE - 0.8%
6,000 Avon Products 267,000
--------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.5%
3,000 Emerson Electric 181,125
--------------------------------------------------------
ELECTRONICS - 5.8%
13,500 Arrow Electronics* 418,500
5,300 Avnet 314,025
5,700 AVX 130,744
10,500 General Semiconductor* 154,875
6,875 Molex, Class A 240,625
4,800 Motorola 139,500
8,400 Solectron* 351,750
9,800 Viasystems Group* 158,638
--------------------------------------------------------
1,908,657
--------------------------------------------------------
ENTERTAINMENT & LEISURE - 1.1%
8,000 SFX Entertainment, Class A* 362,500
--------------------------------------------------------
FINANCIAL SERVICES - 2.6%
9,80 Countrywide Credit 297,063
13,600 Federal Home Loan Mortgage
Corporation 550,800
--------------------------------------------------------
847,863
--------------------------------------------------------
FOOD RETAILERS - 1.7%
26,000 Kroger Company (The)* 573,625
--------------------------------------------------------
HEAVY MACHINERY - 4.2%
13,500 Applied Power, Class A 452,250
7,000 Caterpillar 237,125
4,500 Dover 182,531
14,700 Parker Hannifin 503,475
--------------------------------------------------------
1,375,381
--------------------------------------------------------
Value
Shares (Note 1)
INDUSTRIAL - DIVERSIFIED - 2.7%
12,000 Carlisle Companies $ 540,000
4,100 Minnesota Mining &
Manufacturing (3M) 338,250
--------------------------------------------------------
878,250
--------------------------------------------------------
INSURANCE - 3.4%
4,200 AFLAC 192,938
6,000 Everest Re Group 197,250
9,000 John Hancock Financial Services* 213,188
9,000 Protective Life 239,625
5,100 XL Capital, Class A 276,038
--------------------------------------------------------
1,119,039
--------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 2.2%
4,700 AMFM* 324,300
9,900 Emmis Communications, Class A* 409,613
--------------------------------------------------------
733,913
--------------------------------------------------------
METALS - 1.9%
9,400 Alcoa 272,600
15,100 Crane 367,119
--------------------------------------------------------
639,719
--------------------------------------------------------
OIL & GAS - 1.6%
6,400 Anadarko Petroleum 315,600
2,600 Chevron 220,513
--------------------------------------------------------
536,113
--------------------------------------------------------
PHARMACEUTICALS - 1.7%
5,800 American Home Products 340,750
4,400 Teva Pharmaceutical Industries, ADR 243,925
--------------------------------------------------------
584,675
--------------------------------------------------------
REAL ESTATE - 0.9%
14,000 Prologis Trust, REIT 298,375
--------------------------------------------------------
RETAILERS - 1.0%
8,000 CVS 320,000
--------------------------------------------------------
TELEPHONE SYSTEMS - 2.7%
6,000 Bell Atlantic 304,875
3,500 Sprint 178,500
9,000 Worldcom Inc.* 412,875
--------------------------------------------------------
896,250
--------------------------------------------------------
TRANSPORTATION - 2.7%
8,500 Burlington Northern Santa Fe 194,969
9,500 Canadian Pacific 248,781
4,600 Forward Air* 184,000
9,303 Sabre Group Holdings* 265,136
--------------------------------------------------------
892,886
--------------------------------------------------------
TOTAL COMMON STOCKS
(COST $16,917,304) $17,161,339
--------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ASSET-BACKED SECURITIES - 2.2%
ELECTRIC UTILITIES - 2.2%
$ 750,000 PECO Energy
Transition Trust,
Series 1999-A,
Class A2 5.63% 03/01/05 $ 729,255
--------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
TOUCHSTONE BALANCED FUND
--------------------------------------------------------------------------------
Schedule of Investments continued
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ASSET-BACKED SECURITIES - Continued
FINANCIAL SERVICES - 0.0%
$ 691 Merrill Lynch
Mortgage
Investors,
Series 1991-I,
Class A 7.65% 01/15/12 $ 689
--------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(COST $750,284) $ 729,944
--------------------------------------------------------
CORPORATE BONDS - 21.2%
BANKING - 5.1%
$ 750,000 Associates
Corporation of
North America 5.75% 11/01/03 $ 708,610
250,000 BB&T 7.25% 06/15/07 236,357
250,000 Chase
Manhattan 7.25% 06/01/07 243,757
500,000 Household
Finance 7.875% 03/01/07 497,544
691 Nykredit 10/01/26 83
--------------------------------------------------------
1,686,351
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 0.5%
Coca-Cola
Femsa 8.95% 11/01/06 158,800
--------------------------------------------------------
CHEMICALS - 0.3%
100,000 Belo 6.875% 06/01/02 97,431
--------------------------------------------------------
COMPUTER SOFTWARE & PROCESSING - 1.1%
400,000 Computer
Associates
International 6.375% 04/15/05 374,587
--------------------------------------------------------
ELECTRIC UTILITIES - 4.3%
215,000 Financiera
Energy 9.375% 06/15/06 169,526
750,000 Tennessee
Valley
Authority 5.00% 12/18/03 701,828
550,000 Wisconsin
Electric Power 6.625% 12/01/02 545,108
--------------------------------------------------------
1,416,462
--------------------------------------------------------
FINANCIAL SERVICES - 6.3%
20,000 Access
Financial 7.10% 05/15/21 19,801
750,000 AT&T Capital 7.50% 11/15/00 751,160
250,000 Ford Credit 5.75% 01/25/01 248,073
500,000 GMAC 7.125% 05/01/01 499,325
575,000 Morgan Stanley
Dean Witter 7.75% 06/15/05 577,998
--------------------------------------------------------
2,096,357
--------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 1.4%
500,000 CSC Holdings 7.625% 07/15/18 448,451
--------------------------------------------------------
METALS - 0.9%
300,000 AK Steel 9.125% 12/15/06 288,000
--------------------------------------------------------
MULTIPLE UTILITIES - 0.9%
New Brunswick 7.125% 10/01/02 299,438
--------------------------------------------------------
OIL & GAS - 0.4%
Petroleos
Mexicanos 8.85% 09/15/07 145,875
--------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
TOTAL CORPORATE BONDS
(COST $7,331,413) $ 7,011,752
--------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 14.1%
FINANCIAL SERVICES - 0.5%
$ 40,000 General Electric
Capital Mortgage
Services,
Series 1993-14,
Class A7 6.50% 11/25/23 $ 34,866
44,500 General Electric
Capital Mortgage
Services,
Series 1994-10,
Class A10 6.50% 03/25/24 41,905
40,000 Merrill Lynch
Mortgage
Investors,
Series 1995-C3,
Class A3 7.089% 12/26/25 39,318
50,000 Prudential Home
Mortgage
Securities,
Series 1994-17,
Class A6 6.25% 04/25/24 41,112
--------------------------------------------------------
157,201
--------------------------------------------------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 13.6%
465,000 Federal National
Mortgage
Association 6.00% 05/15/08 432,790
674,376 Federal National
Mortgage
Association 6.00% 01/01/14 637,946
35,000 Federal National
Mortgage
Association 6.15% 10/25/07 34,656
475,700 Federal National
Mortgage
Association 6.247% 06/25/16 455,375
589,432 Federal National
Mortgage
Association 6.50% 12/01/12 568,378
750,000 Federal National
Mortgage
Association 6.50% 04/29/09 700,187
467,301 Federal National
Mortgage
Association 6.50% 07/18/28 424,722
697,931 Federal National
Mortgage
Association 8.00% 01/01/30 701,042
600,813 Government
National
Mortgage
Association 4.00% 10/20/25 548,914
--------------------------------------------------------
4,504,010
--------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
TOUCHSTONE BALANCED FUND
--------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
MORTGAGE-BACKED SECURITIES - Continued
TOTAL MORTGAGE-BACKED SECURITIES
(COST $4,927,548) $ 4,661,211
--------------------------------------------------------
MUNICIPAL BONDS - 0.5%
HOUSING - 0.4%
$ 40,000 Baltimore
Community
Development
Financing 8.20% 08/15/07 $ 41,416
35,000 New York State
Housing Finance
Agency
Service 7.50% 09/15/03 34,829
45,000 Ohio Housing
Financial
Agency 7.90% 10/01/14 44,930
--------------------------------------------------------
121,175
--------------------------------------------------------
TRANSPORTATION - 0.1%
30,000 Oklahoma City
Airport 9.40% 11/01/10 31,792
--------------------------------------------------------
TOTAL MUNICIPAL BONDS
(COST $151,245) $ 152,967
--------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 1.9%
UNITED KINGDOM - 0.6%
GBP 105,000 United Kingdom
Treasury 8.00% 12/07/15 $ 212,688
--------------------------------------------------------
SOUTH AFRICA - 1.3%
ZAR 3,180,000 Republic of
South Africa 13.00% 08/31/10 438,125
--------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
TOTAL SOVEREIGN DEBT OBLIGATIONS
(COST $819,541) $ 650,813
--------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 5.0%
$ 600,000 U.S. Treasury
Bond 6.75% 08/15/26 $ 644,813
725,000 U.S. Treasury
Bond 7.25% 08/15/22 813,349
200,000 U.S. Treasury
Note 5.75% 08/15/03 196,563
--------------------------------------------------------
1,654,725
--------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $1,703,394) $ 1,654,725
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 96.9%
(COST $32,600,729) (a) $32,022,751
CASH AND OTHER ASSETS
NET OF LIABILITIES - 3.1% 1,027,596
NET ASSETS - 100.0% $33,050,347
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$32,600,729, resulting in gross unrealized appreciation and
depreciation of $1,798,662 and $2,376,640, respectively, and net
unrealized depreciation of $577,978.
ADR - American Depository Receipt
REIT - Real Estate Investment Trust
GBP - Great Britain Pound
ZAR - South African Rand
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
TOUCHSTONE BOND FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
AGENCY FOR INTERNATIONAL DEVELOPMENT BONDS - 1.9%
CENTRAL AMERICA - 1.2%
$ 115,000 Central America
International
Development,
Series F
(restricted) 10.00% 12/01/11 $ 127,802
115,000 Central America
International
Development,
Series G
(restricted) 10.00% 12/01/11 127,802
115,000 Central America
International
Development,
Series H
(restricted) 10.00% 12/01/11 127,802
--------------------------------------------------------
383,406
--------------------------------------------------------
HONDURAS - 0.7%
100,000 Republic of Honduras
International
Development,
Series C
(restricted) 13.00% 06/01/06 116,429
100,000 Republic of Honduras
International
Development,
Series D
(restricted) 13.00% 06/01/11 133,590
--------------------------------------------------------
250,019
--------------------------------------------------------
TOTAL AGENCY FOR INTERNATIONAL DEVELOPMENT BONDS
(COST $545,000) $ 633,425
--------------------------------------------------------
ASSET-BACKED SECURITIES - 3.1%
AUTOMOTIVE - 0.5%
$ 41,910 Navistar Financial
Corp. Owner
Trust, Series
1996-A, Class A2 6.35% 11/15/02 $ 41,855
122,486 World Omni
Auto Lease,
Series 1997-B,
Class A3 6.18% 11/25/03 122,413
--------------------------------------------------------
164,268
--------------------------------------------------------
FINANCIAL SERVICES - 2.6%
12,158 Chase Manhattan
Grantor Trust,
Series 1996-A,
Class A 5.20% 02/15/02 12,114
900,000 Chemical Credit
Card Master Trust,
Series 1996-2,
Class A 5.98% 09/15/08 852,777
--------------------------------------------------------
864,891
--------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(COST $1,027,374) $ 1,029,159
--------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE DEBT - 48.4%
AIRLINES - 4.2%
$1,500,000 Delta Air Lines,
Series C 6.65% 03/15/04 $ 1,398,254
--------------------------------------------------------
BANKING - 0.1%
33,808 Mercantile Safe
Deposit
(restricted) 12.125% 01/02/01 33,892
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 2.7%
1,000,000 Coca-Cola
Enterprises 5.75% 11/01/08 885,287
--------------------------------------------------------
CHEMICALS - 2.9%
1,000,000 Du Pont (E.I.)
De Nemours 6.875% 10/15/09 972,530
--------------------------------------------------------
COMMUNICATIONS - 1.5%
500,000 Harris
Corporation 6.65% 08/01/06 493,077
--------------------------------------------------------
ELECTRIC UTILITIES - 10.7%
1,000,000 Consumers
Energy,
Series B 6.50% 06/15/18 932,124
1,000,000 PSE&G Capital 6.74% 10/23/01 990,504
1,000,000 Tennessee Valley
Authority,
Series G 5.375% 11/13/08 888,111
750,000 Virginia Electric
Power 7.625% 07/01/07 738,879
--------------------------------------------------------
3,549,618
--------------------------------------------------------
ELECTRONICS - 2.8%
1,000,000 Raytheon 5.70% 11/01/03 941,496
--------------------------------------------------------
FINANCIAL SERVICES - 9.5%
1,000,000 American
Express 6.75% 06/23/04 975,759
500,000 Credit Suisse First
Boston-London,
144A, FLIRB 7.90% 05/01/07 463,300
750,000 Ford Credit 5.75% 02/23/04 705,165
200,000 Ford Credit 6.75% 05/15/05 194,121
1,000,000 Safeco Capital 8.072% 07/15/37 846,079
--------------------------------------------------------
3,184,424
--------------------------------------------------------
FOREST PRODUCTS & PAPER - 0.8%
250,000 Georgia-Pacific 9.50% 05/15/22 250,408
--------------------------------------------------------
HEALTH CARE PROVIDERS - 2.4%
850,000 Columbia/HCA
Health 6.73% 07/15/45 785,598
--------------------------------------------------------
HOUSEHOLD PRODUCTS - 2.0%
750,000 Owens-Illinois 7.15% 05/15/05 679,573
--------------------------------------------------------
HOUSING - 2.7%
1,000,000 Champion
Enterprises,
144A 7.625% 05/15/09 911,104
--------------------------------------------------------
MEDIA - BROADCASTING & PUBLISHING - 0.8%
250,000 News America
Holdings 10.125% 10/15/12 261,945
--------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
TOUCHSTONE BOND FUND
--------------------------------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
CORPORATE DEBT - Continued
TELEPHONE SYSTEMS - 3.1%
$1,000,000 MCI
WorldCom 8.875% 01/15/06 $ 1,030,430
--------------------------------------------------------
TRANSPORTATION - 2.2%
750,000 Norfolk
Southern 7.35% 05/15/07 728,422
--------------------------------------------------------
TOTAL CORPORATE DEBT
(COST $17,035,431) $16,106,058
--------------------------------------------------------
MORTGAGE-BACKED SECURITIES - 24.1%
$ 226,219 Federal Home
Loan Mortgage
Corporation 7.00% 10/01/25 $ 218,982
275,203 Federal Home
Loan Mortgage
Corporation 7.00% 12/01/25 266,399
2,745,773 Federal National
Mortgage
Association 6.50% 07/01/28 2,588,492
1,891,460 Government
National
Mortgage
Association 6.50% 09/15/28 1,794,936
438,947 Government
National
Mortgage
Association 7.00% 07/15/28 426,911
290,312 Government
National
Mortgage
Association 7.00% 02/15/09 288,343
1,142,647 Government
National
Mortgage
Association 7.00% 05/15/28 1,111,319
429,458 Government
National
Mortgage
Association 7.00% 07/15/28 417,684
1,179 Government
National
Mortgage
Association 7.50% 07/15/23 1,171
Principal Interest Maturity Value
Amount Rate Date (Note 1)
MORTGAGE-BACKED SECURITIES - Continued
$ 305,151 Government
National
Mortgage
Association 7.50% 12/15/25 $ 303,186
603,855 Government
National
Mortgage
Association 7.50% 12/15/27 599,967
--------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(COST $8,441,236) $ 8,017,390
--------------------------------------------------------
SOVEREIGN GOVERNMENT OBLIGATIONS - 3.0%
CANADA - 3.0%
$1,000,000 Province of
Ontario 7.375% 01/27/03 $ 1,004,375
--------------------------------------------------------
TOTAL SOVEREIGN GOVERNMENT OBLIGATIONS
(COST $1,077,440) $ 1,004,375
--------------------------------------------------------
U.S. AGENCY OBLIGATIONS - 2.9%
$1,000,000 Federal National
Mortgage
Association 5.75% 04/15/03 $ 968,993
--------------------------------------------------------
TOTAL U.S. AGENCY OBLIGATIONS
(COST $998,999) $ 968,993
--------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 2.7%
$ 675,000 U.S. Treasury
Bond 9.125% 05/15/18 $ 880,664
--------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $849,551) $ 880,664
--------------------------------------------------------
PREFERRED STOCKS - 1.8%
ELECTRIC UTILITIES - 1.8%
$ 9,300 Appalachian Power;
8.25% Cumulative $ 219,713
--------------------------------------------------------
16,800 Columbus Southern
Power; 8.375% Cumulative 386,400
--------------------------------------------------------
TOTAL PREFERRED STOCKS
(COST $673,817) $ 606,113
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 87.9%
(COST $30,648,848) (a) $29,246,177
CASH AND OTHER ASSETS
NET OF LIABILITIES - 12.1% 4,023,073
NET ASSETS - 100.0% $33,269,250
--------------------------------------------------------
Notes to the Schedule of Investments:
(a) The aggregate identified cost for federal income tax purposes is
$30,648,848, resulting in gross unrealized appreciation and
depreciation of $142,555 and $1,545,226, respectively, and net
unrealized depreciation of $1,402,671.
144A - Securities restricted for resale to qualified institutional buyers
with registration rights.
FLIRB - Front-Load Interest Reduction Bonds
The accompanying notes are an integral part of the financial statements.
21
<PAGE>
TOUCHSTONE STANDBY INCOME FUND
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
Principal Interest Maturity Value
Amount Rate Date (Note 1)
ASSET-BACKED SECURITIES - 34.6%
ASSET-BACKED - AUTOMOTIVE - 12.7%
$ 382,570 Auto Finance Group
Receivables Trust,
Series 1997-A,
Class A 6.35% 10/15/02 $ 380,508
536,729 Auto Finance Group
Receivables Trust,
Series 1997-B,
Class A 6.20% 02/15/03 532,516
791,430 Honda Auto
Lease Trust,
Series 1999-A,
Class A-2 5.875% 10/15/01 791,042
773,846 Mellon Auto
Grantor Trust,
Series 1999-1,
Class B 5.76% 10/17/05 761,279
777,792 Onyx Acceptance
Auto Trust, Series
1998-1, Class A 5.95% 07/15/04 768,568
--------------------------------------------------------
3,233,913
--------------------------------------------------------
ASSET-BACKED - CREDIT CARD RECEIVABLES - 10.9%
1,300,000 Chase Credit Card
Master Trust,
Series 1998-6,
Class B 7.161% 09/15/04 1,302,002
1,465,000 Circuit City Credit
Card Master Trust,
Series 2000-1,
Class B 7.241% 02/15/06 1,466,568
--------------------------------------------------------
2,768,570
--------------------------------------------------------
ASSET-BACKED - HOME EQUITY - 1.2%
307,959 UCFC Home
Equity Loan,
Series 1998-D,
Class AF1 6.105% 05/15/13 306,693
--------------------------------------------------------
ASSET-BACKED - FINANCIAL SERVICES - 9.8%
405,577 Capital Asset
Research Funding,
Series 1998-A,
Class A, 144A 5.905% 12/15/05 402,789
1,038,953 CISDG 97-1
A3 SDG & E 6.07% 03/25/03 1,032,543
1,078,361 Key Auto Finance
Trust-Series
1997-2 6.30% 10/15/03 1,071,028
--------------------------------------------------------
2,506,360
--------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(COST $8,847,169) $ 8,815,536
--------------------------------------------------------
COMMERCIAL PAPER - 17.1%
ELECTRIC UTILITIES - 7.8%
$1,000,000 LG&E Capital,
Sec. 4(2) 7.05% 07/12/00 $ 997,258
1,000,000 Texas Utilities,
Sec. 4(2) 6.82% 07/07/00 996,590
--------------------------------------------------------
1,993,848
--------------------------------------------------------
FOOD RETAILERS - 4.6%
1,175,000 Safeway,
Sec. 4(2) 6.95% 08/01/00 1,160,936
--------------------------------------------------------
OIL & GAS - 2.0%
525,000 Williams
Companies (The) 6.85% 07/25/00 521,404
--------------------------------------------------------
Principal Interest Maturity Value
Amount Rate Date (Note 1)
TELEPHONE SYSTEMS - 2.7%
$ 700,000 MCI
WorldCom,
Sec. 4(2) 6.10% 08/09/00 $ 680,311
--------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST $4,356,499) $ 4,356,499
--------------------------------------------------------
CORPORATE DEBT - 42.2%
BANKING - 5.4%
$1,400,000 Popular, Series 3,
MTN 6.40% 08/25/00 $ 1,399,024
--------------------------------------------------------
BEVERAGES, FOOD & TOBACCO - 5.6%
1,400,000 ConAgra,
Series B 8.75% 08/30/01 1,414,648
--------------------------------------------------------
COMMERCIAL SERVICES - 4.4%
1,150,000 Comdisco 6.85% 08/09/01 1,129,760
--------------------------------------------------------
ELECTRIC UTILITIES - 5.5%
1,400,000 SCANA,
FRN, 144A 6.59% 02/08/02 1,399,227
--------------------------------------------------------
FINANCIAL SERVICES - 5.5%
1,400,000 Potomac Capital
Investment,
144A 7.55% 11/19/01 1,397,340
--------------------------------------------------------
OIL & GAS - 10.2%
1,400,000 Enron, 144A 6.80% 09/10/01 1,398,688
1,200,000 Petroleum
Geo-Services,
Yankee Dollar,
FRN 6.841% 03/20/02 1,198,493
--------------------------------------------------------
2,597,181
--------------------------------------------------------
RETAILERS - 5.6%
1,400,000 Dayton Hudson 10.00% 12/01/00 1,415,407
--------------------------------------------------------
TOTAL CORPORATE DEBT
(COST $10,815,940) $10,752,587
--------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 5.2%
$1,350,000 Federal Home
Loan Mortgage
Corportation,
Series UB 6.00% 11/15/08 $ 1,335,933
--------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(COST $1,359,281) $ 1,335,933
--------------------------------------------------------
TOTAL INVESTMENTS AT MARKET VALUE - 99.1%
(COST $25,378,889) (a) $25,260,555
CASH AND OTHER ASSETS
NET OF LIABILITIES - 0.9% 217,048
NET ASSETS - 100.0% $25,477,603
--------------------------------------------------------
Notes to the Schedule of Investments:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$25,378,889, resulting in gross unrealized appreciation and
depreciation of $4,695 and $123,029, respectively, and net unrealized
depreciation of $118,334.
144A - Security exempt from registration under Rule 144A of Securities Act
of 1933, as amended. This security may be sold in transactions exempt
from registration, normally to qualified institutional buyers.
FRN - Floating Rate Notes
MTN - Medium Term Note
Sec. 4(2) - Securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined
to be liquid under guidelines established by the Board of
Directors.
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 VARIABLE SERIES TRUST
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
SMALL CAP EMERGING INTERNATIONAL INCOME HIGH
VALUE GROWTH EQUITY OPPORTUNITY YIELD
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1)(a) $13,864,188 $38,518,837 $38,081,861 $18,684,554 $14,985,969
Cash 316,751 3,155,620 684,782 3,056,132 73,150
Foreign currency(b) -- -- 281,411 -- --
Receivables for:
Investments sold 472,387 16,446 287,873 149,073 --
Unrealized appreciation on foreign
forward currency contracts (Note 1) -- -- -- -- --
Dividends 158 23,560 26,365 -- --
Foreign tax reclaims -- -- 36,507 -- --
Interest 1,583 9,787 3,888 562,479 387,784
Reimbursement receivable from Sponsor (Note 4) -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Total assets 14,655,067 41,724,250 39,402,687 22,452,238 15,446,903
-------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for:
Investments purchased 364,866 -- 805,611 350,000 --
Payable to Investment Advisor (Note 3) 5,507 65,580 41,894 16,410 2,394
Other accrued expenses 8,701 16,108 24,882 18,061 9,184
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities 379,074 81,688 872,387 384,471 11,578
-------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (C): $14,275,993 $41,642,562 $38,530,300 $22,067,767 $15,435,325
-------------------------------------------------------------------------------------------------------------------------------
Shares outstanding 1,074,637 1,747,923 2,324,688 2,862,869 1,814,095
-------------------------------------------------------------------------------------------------------------------------------
Net asset value $ 13.28 $ 23.82 $ 16.57 $ 7.71 $ 8.51
-------------------------------------------------------------------------------------------------------------------------------
(a) Cost of investments of: $12,580,490 $25,748,645 $35,502,955 $19,126,941 $16,279,101
(b) Cost of foreign currency of: $ -- $ -- $ 284,705 $ -- $ --
(c) See the Statements of Changes in Net Assets for components of net assets.
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
--------------------------------------------------------------------------------
Statements of Assets and Liabilities continued
<TABLE>
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
VALUE GROWTH & ENHANCED TOUCHSTONE TOUCHSTONE STANDBY
PLUS INCOME 30 BALANCED BOND INCOME
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1)(a) $ 6,465,716 $52,951,462 $12,372,084 $32,022,751 $29,246,177 $25,260,555
Cash 270,740 588,616 130,506 803,539 3,658,828 55,558
Foreign currency(b) -- -- -- -- -- --
Receivables for:
Investments sold 92,159 -- -- 188,782 -- --
Unrealized appreciation on foreign
forward currency contracts (Note 1) -- -- -- 6,530 -- --
Dividends 4,841 78,324 11,339 12,396 8,794 --
Foreign tax reclaims -- 4,488 -- 91 -- --
Interest 853 3,260 1,841 200,584 398,030 179,641
Reimbursement receivable from
Sponsor (Note 4) -- -- 413 -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Total assets 6,834,309 53,626,150 12,516,183 33,234,673 33,311,829 25,495,754
-------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for:
Investments purchased 16,465 241,674 -- 131,500 -- --
Payable to Investment Advisor (Note 3) 4,963 59,157 -- 33,893 25,767 4,521
Other accrued expenses 14,554 26,027 8,422 18,933 16,812 13,630
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities 35,982 326,858 8,422 184,326 42,579 18,151
-------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (C): $ 6,798,327 $53,299,292 $12,507,761 $33,050,347 $33,269,250 $25,477,603
-------------------------------------------------------------------------------------------------------------------------------
Shares outstanding 621,546 5,136,454 1,218,499 2,325,233 3,233,103 2,571,295
-------------------------------------------------------------------------------------------------------------------------------
Net asset value $ 10.94 $ 10.38 $ 10.26 $ 14.21 $ 10.29 $ 9.91
-------------------------------------------------------------------------------------------------------------------------------
(a) Cost of investments of: $ 6,515,938 $54,449,541 $11,888,694 $32,600,729 $30,648,848 $25,378,889
(b) Cost of foreign currency of: $ -- $ -- $ -- $ -- $ -- $ --
(c) See the Statements of Changes in Net Assets for components of net assets.
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended June 30, 2000 (unaudited)
<TABLE>
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
SMALL CAP EMERGING INTERNATIONAL INCOME HIGH
VALUE GROWTH EQUITY OPPORTUNITY YIELD
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1):
Interest $ 7,300 $ 50,611 $ 15,639 $ 1,347,228 $ 777,916
Dividends (a) 7,847 81,613 285,401 -- --
--------------------------------------------------------------------------------------------------------------------------------
Total investment income 15,147 132,224 301,040 1,347,228 777,916
--------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 52,601 150,992 182,930 76,109 44,095
Custody, administration and fund accounting fees 45,647 41,715 104,903 42,712 42,508
Sponsor fees (Note 3) 13,150 37,748 38,512 23,418 14,698
Professional fees 2,027 4,794 5,626 2,965 3,485
Printing fees 461 2,071 2,275 2,352 690
Trustee fees (Note 3) 375 1,691 1,858 1,920 564
Miscellaneous 664 2,278 2,462 2,513 996
--------------------------------------------------------------------------------------------------------------------------------
Total expenses 114,925 241,289 338,566 151,989 107,036
Waiver of Sponsor fee (Note 4) (13,150) (24,239) (38,512) (23,418) (14,698)
Reimbursement from Sponsor (Note 4) (36,023) -- (59,356) (29,044) (33,544)
--------------------------------------------------------------------------------------------------------------------------------
Net expenses 65,752 217,050 240,698 99,527 58,794
--------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (50,605) (84,826) 60,342 1,247,701 719,122
--------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 2,110,833 4,761,121 4,753,480 (1,296,746) (1,433,969)
Foreign currency -- -- (88,822) -- --
--------------------------------------------------------------------------------------------------------------------------------
2,110,833 4,761,121 4,664,658 (1,296,746) (1,433,969)
--------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on:
Investments (519,418) 3,665,676 (6,970,403) 67,937 554,401
Foreign currency -- -- (2,986) (236) --
--------------------------------------------------------------------------------------------------------------------------------
(519,418) 3,665,676 (6,973,389) 67,701 554,401
--------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS): 1,591,415 8,426,797 (2,308,731) (1,229,045) (879,568)
--------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,540,810 $8,341,971 $(2,248,389) $ 18,656 $ (160,446)
--------------------------------------------------------------------------------------------------------------------------------
(a) Net of foreign tax withholding of: $ -- $ -- $ 48,346 $ -- $ --
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
--------------------------------------------------------------------------------
Statements of Operations continued
<TABLE>
<CAPTION>
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
VALUE GROWTH & ENHANCED TOUCHSTONE TOUCHSTONE STANDBY
PLUS INCOME 30 BALANCED BOND INCOME
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME (NOTE 1):
Interest $ 4,776 $ 16,829 $ 7,296 $ 552,750 $ 1,148,355 $ 918,250
Dividends (a) 45,264 597,171 69,027 158,284 44,958 --
------------------------------------------------------------------------------------------------------------------------------------
Total investment income 50,040 614,000 76,323 711,034 1,193,313 918,250
------------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 24,877 229,085 39,308 136,643 91,540 34,552
Custody, administration
and fund accounting fees 38,358 53,306 42,807 41,150 36,522 40,836
Sponsor fees (Note 3) 6,634 57,271 12,095 34,161 33,287 27,642
Professional fees 1,299 10,183 2,026 6,005 5,526 3,818
Printing fees 358 4,095 461 2,546 2,288 1,467
Trustee fees (Note 3) 293 3,343 375 2,078 1,869 1,198
Miscellaneous 231 5,322 664 3,003 2,715 1,906
------------------------------------------------------------------------------------------------------------------------------------
Total expenses 72,050 362,605 97,736 225,586 173,747 111,419
Waiver of Sponsor fee (Note 4) (6,634) (57,271) (12,095) (34,161) (33,287) (27,642)
Reimbursement from Sponsor (Note 4) (27,272) (61,931) (40,285) (37,701) (15,633) (14,673)
------------------------------------------------------------------------------------------------------------------------------------
Net expenses 38,144 243,403 45,356 153,724 124,827 69,104
------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 11,896 370,597 30,967 557,310 1,068,486 849,146
------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments 181,056 942,367 226,341 592,569 (397,988) (51,425)
Foreign currency -- -- -- 34,502 -- --
------------------------------------------------------------------------------------------------------------------------------------
181,056 942,367 226,341 627,071 (397,988) (51,425)
------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) on:
Investments (387,804) (3,289,129) (595,111) (234,696) 328,036 11,842
Foreign currency -- -- -- (1,109) -- --
------------------------------------------------------------------------------------------------------------------------------------
(387,804) (3,289,129) (595,111) (235,805) 328,036 11,842
------------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS): (206,748) (2,346,762) (368,770) 391,266 (69,952) (39,583)
------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS: $ (194,852) $ (1,976,165) $ (337,803) $ 948,576 $ 998,534 $ 809,563
------------------------------------------------------------------------------------------------------------------------------------
(a) Net of foreign tax withholding of: $ 721 $ 4,672 $ -- $ 1,128 $ 2,453 $ --
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Touchstone Touchstone Touchstone
Small Cap Emerging Growth International Equity
Value Fund Fund Fund
-------------------------- -------------------------- ----------------------------
For the Six For the For the Six For the For the Six For the
Months Period Months Year Months Year
Ended Ended (a) Ended Ended Ended Ended
June 30, December 31, June 30, December 31, June 30, December 31,
2000 1999 2000 1999 2000 1999
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ (50,605) $ (33,386) $ (84,826) $ (105,346) $ 60,342 $ 127,488
Net realized gain (loss) 2,110,833 50,549 4,761,121 6,087,461 4,664,658 6,299,287
Net change in unrealized
appreciation (depreciation) (519,418) 1,803,116 3,665,676 6,580,932 (6,973,389) 4,752,127
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 1,540,810 1,820,279 8,341,971 12,563,047 (2,248,389) 11,178,902
--------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- -- (150,630)
Realized capital gains -- -- -- (5,252,284) -- (3,011,529)
--------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- -- (5,252,284) -- (3,162,159)
--------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Capital contribution (Note 7) -- -- -- -- -- --
Proceeds from shares sold 704,767 10,268,930 964,578 3,035,224 1,794,938 2,925,528
Reinvestment of dividends -- -- -- 5,252,284 -- 3,162,159
Cost of shares redeemed (39,513) (19,280) (4,543,448) (9,982,713) (1,679,626) (7,254,079)
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
from share transactions 665,254 10,249,650 (3,578,870) (1,695,205) 115,312 (1,166,392)
--------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,206,064 12,069,929 4,763,101 5,615,558 (2,133,077) 6,850,351
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 12,069,929 -- 36,879,461 31,263,903 40,663,377 33,813,026
--------------------------------------------------------------------------------------------------------------------------------
End of period $14,275,993 $12,069,929 $41,642,562 $36,879,461 $38,530,300 $40,663,377
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $10,914,904 $10,249,650 $23,310,304 $26,889,174 $28,189,978 $28,074,667
Undistributed (distributions
in excess of) net investment income (50,605) -- (84,826) -- 92,620 32,278
Accumulated net realized
gain (loss) on investments 2,127,996 17,163 5,646,892 885,771 7,671,782 3,007,124
Net unrealized appreciation
(depreciation) on investments 1,283,698 1,803,116 12,770,192 9,104,516 2,575,920 9,549,308
--------------------------------------------------------------------------------------------------------------------------------
Net assets applicable
to shares outstanding $14,275,993 $12,069,929 $41,642,562 $36,879,461 $38,530,300 $40,663,377
--------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING (NOTE 1):
Share contribution (Note 7) -- -- -- -- -- --
Shares sold 54,196 1,025,510 45,174 187,027 107,458 206,084
Reinvestment of dividends -- -- -- 280,421 -- 184,168
--------------------------------------------------------------------------------------------------------------------------------
54,196 1,025,510 45,174 467,448 107,458 390,252
Shares redeemed (3,183) (1,886) (215,382) (588,054) (100,583) (494,330)
--------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 51,013 1,023,624 (170,208) (120,606) 6,875 (104,078)
Beginning of period 1,023,624 -- 1,918,131 2,038,737 2,317,813 2,421,891
--------------------------------------------------------------------------------------------------------------------------------
End of period 1,074,637 1,023,624 1,747,923 1,918,131 2,324,688 2,317,813
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The Fund commenced operations on May 1, 1999.
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
--------------------------------------------------------------------------------
Statements of Changes in Net Assets continued
<TABLE>
<CAPTION>
Touchstone Touchstone Touchstone
Income High Value
Opportunity Yield Plus
Fund Fund Fund
----------------------------- ---------------------------- ----------------------
For the Six For the For the Six For the For the Six For the
Months Year Months Period Months Year
Ended Ended Ended Ended (a) Ended Ended
June 30, December 31, June 30, December 31, June 30, December 31,
2000 1999 2000 1999 2000 1999
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 1,247,701 $ 3,382,939 $ 719,122 $ 932,251 $ 11,896 $ 18,651
Net realized gain (loss) (1,296,746) (6,795,726) (1,433,969) (357,539) 181,056 835,544
Net change in unrealized
appreciation (depreciation) 67,701 4,138,625 554,401 (1,847,534) (387,804) 81,625
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 18,656 725,838 (160,446) (1,272,822) (194,852) 935,820
----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- (3,721,950) -- (936,630) -- (18,567)
Realized capital gains -- -- -- -- -- (278,688)
----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (3,721,950) -- (936,630) -- (297,255)
----------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Capital contribution (Note 7) -- -- -- -- -- --
Proceeds from shares sold 784,708 3,201,943 963,563 16,270,006 970,947 7,276,057
Reinvestment of dividendS -- 3,721,950 -- 936,630 -- 297,255
Cost of shares redeemed (4,223,156) (12,934,235) (283,724) (81,252) (1,148,561) (4,208,758)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
from share transactions (3,438,448) (6,010,342) 679,839 17,125,384 (177,614) 3,364,554
----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets (3,419,792) (9,006,454) 519,393 14,915,932 (372,466) 4,003,119
----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 25,487,559 34,494,013 14,915,932 -- 7,170,793 3,167,674
----------------------------------------------------------------------------------------------------------------------------------
End of period $22,067,767 $25,487,559 $15,435,325 $14,915,932 $ 6,798,327 $7,170,793
----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $34,162,609 $37,601,057 $17,800,843 $17,121,005 $ 6,338,524 $6,516,138
Undistributed (distributions
in excess of) net investment income 956,961 (290,740) 719,122 -- 11,999 103
Accumulated net realized
gain (loss) on investments (12,609,180) (11,312,434) (1,791,508) (357,539) 498,026 316,970
Net unrealized appreciation
(depreciation) on investments (442,623) (510,324) (1,293,132) (1,847,534) (50,222) 337,582
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable
to shares outstanding $22,067,767 $25,487,559 $15,435,325 $14,915,932 $ 6,798,327 $7,170,793
----------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING (NOTE 1):
Share contribution (Note 7) -- -- -- -- -- --
Shares sold 102,840 371,494 115,680 1,632,166 88,872 686,215
Reinvestment of dividends -- 477,283 -- 108,784 -- 26,780
----------------------------------------------------------------------------------------------------------------------------------
102,840 848,777 115,680 1,740,950 88,872 712,995
Shares redeemed (551,372) (1,508,551) (33,819) (8,716) (106,566) (385,059)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (448,532) (659,774) 81,861 1,732,234 (17,694) 327,936
Beginning of period 3,311,401 3,971,175 1,732,234 -- 639,240 311,304
----------------------------------------------------------------------------------------------------------------------------------
End of period 2,862,869 3,311,401 1,814,095 1,732,234 621,546 639,240
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Touchstone
Growth & Touchstone Touchstone
Income Enhanced Balanced
Fund 30 Fund Fund
----------------------------- ---------------------------- ----------------------
For the Six For the For the Six For the For the Six For the
Months Year Months Period Months Year
Ended Ended (b) Ended Ended (a) Ended Ended
June 30, December 31, June 30, December 31, June 30, December 31,
2000 1999 2000 1999 2000 1999
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 370,597 $ 1,103,774 $ 30,967 $ 62,575 $ 557,310 $ 1,031,803
Net realized gain (loss) 942,367 2,473,484 226,341 (351,490) 627,071 3,070,980
Net change in unrealized
appreciation (depreciation) (3,289,129) (1,294,188) (595,111) 1,078,501 (235,805) (410,920)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (1,976,165) 2,283,070 (337,803) 789,586 948,576 3,691,863
----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- -- -- (62,549) -- (1,026,659)
Realized capital gains -- -- -- -- -- (2,545,689)
----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- -- (62,549) -- (3,572,348)
----------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Capital contribution (Note 7) -- 74,660,781 -- -- -- --
Proceeds from shares sold 591,248 6,044,998 942,905 13,036,977 544,091 4,531,602
Reinvestment of dividendS -- -- -- 62,549 -- 3,572,348
Cost of shares redeemed (10,095,073) (18,209,567) (1,629,445) (294,459) (5,158,354) (12,757,150)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
from share transactions (9,503,825) 62,496,212 (686,540) 12,805,067 (4,614,263) (4,653,200)
----------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets (11,479,990) 64,779,282 (1,024,343) 13,532,104 (3,665,687) (4,533,685)
----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 64,779,282 -- 13,532,104 -- 36,716,034 41,249,719
----------------------------------------------------------------------------------------------------------------------------------
End of period $53,299,292 $64,779,282 $12,507,761 $13,532,104 $33,050,347 $36,716,034
----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $49,936,675 $59,440,499 $12,118,527 $12,805,067 $31,499,613 $36,113,876
Undistributed (distributions
in excess of) net investment income 1,474,371 1,103,774 30,993 26 552,708 (4,602)
Accumulated net realized
gain (loss) on investments 3,386,325 2,443,958 (125,149) (351,490) 1,577,113 950,042
Net unrealized appreciation
(depreciation) on investments (1,498,079) 1,791,051 483,390 1,078,501 (579,087) (343,282)
----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable
to shares outstanding $53,299,292 $64,779,282 $12,507,761 $13,532,104 $33,050,347 $36,716,034
----------------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING (NOTE 1):
Share contribution (Note 7) -- 7,140,970 -- -- -- --
Shares sold 58,525 568,148 92,118 1,306,360 40,168 314,596
Reinvestment of dividends -- -- -- 5,918 -- 262,287
----------------------------------------------------------------------------------------------------------------------------------
58,525 7,709,118 92,118 1,312,278 40,168 576,883
Shares redeemed (970,281) (1,660,908) (155,977) (29,920) (376,074) (870,844)
----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (911,756) 6,048,210 (63,859) 1,282,358 (335,906) (293,961)
Beginning of period 6,048,210 -- 1,282,358 -- 2,661,139 2,955,100
----------------------------------------------------------------------------------------------------------------------------------
End of period 5,136,454 6,048,210 1,218,499 1,282,358 2,325,233 2,661,139
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Touchstone
Touchstone Standby
Bond Income
Fund Fund
------------------------- ---------------------------
For the Six For the For the Six For the
Months Year Months Year
Ended Ended(b) Ended Ended
June 30, 2000 December 31, June 30, 2000 December 31,
(unaudited) 1999 (unaudited) 1999
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 1,068,486 $ 2,304,970 $ 849,146 $ 1,583,098
Net realized gain (loss) (397,988) (378,508) (51,425) (111,349)
Net change in unrealized
appreciation (depreciation) 328,036 (2,428,089) 11,842 (136,309)
--------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 998,534 (501,627) 809,563 1,335,440
--------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- (346,319) (849,216) (1,586,807)
Realized capital gains -- -- -- --
--------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (346,319) (849,216) (1,586,807)
--------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Capital contribution (Note 7) -- 38,450,838 -- --
Proceeds from shares sold 761,266 5,043,015 7,934,444 13,250,461
Reinvestment of dividendS -- 346,319 849,216 1,586,054
Cost of shares redeemed (3,190,804) (8,291,972) (12,745,480) (11,556,012)
--------------------------------------------------------------------------------------------------------
Net increase (decrease)
from share transactions (2,429,538) 35,548,200 (3,961,820) 3,280,503
--------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (1,431,004) 34,700,254 (4,001,473) 3,029,136
--------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 34,700,254 -- 29,479,076 26,449,940
--------------------------------------------------------------------------------------------------------
End of period $33,269,250 $34,700,254 $25,477,603 $29,479,076
--------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $32,437,530 $34,867,068 $25,758,710 $29,720,531
Undistributed (distributions
in excess of) net investment income 3,031,970 1,963,484 -- 70
Accumulated net realized
gain (loss) on investments (797,579) (399,591) (162,773) (111,348)
Net unrealized appreciation
(depreciation) on investments (1,402,671) (1,730,707) (118,334) (130,177)
--------------------------------------------------------------------------------------------------------
Net assets applicable
to shares outstanding $33,269,250 $34,700,254 $25,477,603 $29,479,076
--------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING (NOTE 1):
Share contribution (Note 7) -- 3,770,359 -- --
Shares sold 75,706 500,745 801,170 1,331,119
Reinvestment of dividends -- 34,280 85,721 159,259
--------------------------------------------------------------------------------------------------------
75,706 4,305,384 886,891 1,490,378
Shares redeemed (318,285) (829,702) (1,287,263) (1,161,048)
--------------------------------------------------------------------------------------------------------
Net increase (decrease) (242,579) 3,475,682 (400,372) 329,330
Beginning of period 3,475,682 -- 2,971,667 2,642,337
--------------------------------------------------------------------------------------------------------
End of period 3,233,103 3,475,682 2,571,295 2,971,667
--------------------------------------------------------------------------------------------------------
</TABLE>
(a) The Fund commenced operations on May 1, 1999.
(b) The Fund commenced operations on January 1, 1999.
The accompanying notes are an integral part of the financial statements.
TOUCHSTONE VARIABLE SERIES TRUST
28-29 [SPREAD]
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share outstanding:
<TABLE>
<CAPTION>
Touchstone Touchstone
Small Cap Emerging
Value Fund Growth Fund
----------------------- -----------------------------------------------------------------------
For the For the
Six Months For the Six Months For the For the For the For the For the
Ended Period Ended Year Year Year Year Year
June 30, Ended (a) June 30, Ended Ended Ended Ended Ended
2000 December 2000 December December, December December December
(unaudited) 31, 1999 (unaudited) 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.79 $ 10.00 $ 19.23 $ 15.33 $ 15.40 $ 12.20 $ 11.27 $ 10.10
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) (0.05) (0.03) (0.05) (0.05) 0.02 0.03 0.04 0.11
Net realized and
unrealized gain
(loss) on investments 1.54 1.82 4.64 7.13 0.46 4.06 1.22 1.87
------------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 1.49 1.79 4.59 7.08 0.48 4.09 1.26 1.98
------------------------------------------------------------------------------------------------------------------------------------
LESS: DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- -- -- -- (0.03) (0.03) (0.04) (0.15)
Realized capital gains -- -- -- (3.18) (0.52) (0.86) (0.29) (0.66)
Return of capital -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions -- -- -- (3.18) (0.55) (0.89) (0.33) (0.81)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 13.28 $ 11.79 $ 23.82 $ 19.23 $ 15.33 $ 15.40 $ 12.20 $ 11.27
------------------------------------------------------------------------------------------------------------------------------------
Total return (b) 12.64% 17.90% 23.87% 46.75% 3.28% 33.67% 11.16% 19.57%
RATIOS AND SUPPLEMENTAL
DATA:
Net assets at end
of period (000s) $14,276 $12,070 $41,643 $36,879 $31,264 $19,417 $ 5,771 $ 2,615
Ratios to average
net assets:
Net expenses 1.00%(c) 1.00%(c) 1.15%(c) 1.15% 1.15% 1.15% 1.15% 1.15%
Net investment
income (loss) (0.77)%(c) (0.48)%(c) (0.45)%(c) (0.34)% 0.14% 0.27% 0.50% 1.09%
Expenses, without waiver
and reimbursement 1.75%(c) 2.03%(c) 1.28%(c) 1.42% 1.49% 2.19% 3.22% 3.73%
Portfolio turnover 107% 86% 44% 89% 66% 88% 89% 101%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Touchstone
International
Equity
Fund
--------------------------------------------------------------------------------------------
For the
Six Months For the For the For the For the For the
Year Ended Year Year Year Year Year
June 30, Ended Ended Ended Ended Ended
2000 December December December December December
(unaudited) 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.54 $ 13.96 $ 12.01 $ 11.07 $ 10.00 $ 9.51
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.03 0.06 0.06 0.07 0.06 0.04
Net realized and unrealized
gain (loss) on investments (1.00) 5.00 2.37 1.56 1.08 0.48
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.97) 5.06 2.43 1.63 1.14 0.52
------------------------------------------------------------------------------------------------------------------------------------
LESS: DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- (0.07) (0.10) (0.05) (0.07) (0.03)
Realized capital gains -- (1.41) (0.38) (0.64) -- --
Return of capital -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (1.48) (0.48) (0.69) (0.07) (0.03)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.57 $ 17.54 $ 13.96 $ 12.01 $ 11.07 $ 10.00
------------------------------------------------------------------------------------------------------------------------------------
Total return (b) (5.53)% 36.47% 20.21% 14.76% 11.47% 5.45%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000s) $38,530 $40,663 $33,813 $19,703 $ 8,758 $ 5,215
Ratios to average net assets:
Net expenses 1.25%(c) 1.25% 1.25% 1.25% 1.25% 1.25%
Net investment income (loss) 0.31%(c) 0.37% 0.49% 0.71% 0.86% 0.46%
Expenses, without waiver
and reimbursement 1.76%(c) 1.84% 1.95% 3.19% 3.03% 3.69%
Portfolio turnover 66% 156% 141% 149% 90% 86%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The Fund commenced operations on May 1, 1999.
(b) Total returns would have been lower had certain expenses not been
reimbursed or waived during the periods shown. (Note 4)
(c) Ratios are annualized.
TOUCHSTONE VARIABLE SERIES TRUST
The accompanying notes are an integral part of the financial statements.
30-31 [SPREAD]
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Financial Highlights continued
Selected data for a share outstanding:
<TABLE>
<CAPTION>
Touchstone Touchstone
Income High
Opportunity Yield
Fund Fund
---------------------------------------------------------------------- -------------------------
For the For the
Six Months For the For the For the For the For the Six Months For the
Ended Year Year Year Year Year Ended Period
June 30, Ended Ended Ended Ended Ended June 30, Ended (a)
2000 December December December December December 2000 December
(unaudited) 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995 (unaudited) 31, 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 7.70 $ 8.69 $ 11.02 $ 11.21 $ 10.09 $ 9.42 $ 8.61 $ 10.00
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
income (loss) 0.42 1.11 1.02 1.20 1.17 1.22 0.40 0.58
Net realized and
unrealized gain (loss)
on investments (0.41) (0.88) (2.30) 0.11 1.45 0.79 (0.50) (1.39)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 0.01 0.23 (1.28) 1.31 2.62 2.01 (0.10) (0.81)
------------------------------------------------------------------------------------------------------------------------------------
Less: dividends
and distributions
to shareholders from:
Net investment income -- (1.22) (1.02) (1.19) (1.17) (1.34) -- (0.58)
Realized capital gains -- -- -- (0.31) (0.33) -- -- --
Return of capital -- -- (0.03) -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions -- (1.22) (1.05) (1.50) (1.50) (1.34) -- (0.58)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 7.71 $ 7.70 $ 8.69 $ 11.02 $ 11.21 $ 10.09 $ 8.51 $ 8.61
------------------------------------------------------------------------------------------------------------------------------------
Total return (d) 0.13% 2.74% (12.27)% 12.03% 27.37% 23.35% (1.16)% (8.11)%
Ratios and
supplemental data:
Net assets at end
of period (000s) $22,068 $25,488 $34,494 $26,879 $ 8,268 $ 2,602 $15,435 $14,916
RATIOS TO AVERAGE
NET ASSETS:
Net expenses 0.85%(e) 0.85% 0.85% 0.85% 0.85% 0.85% 0.80%(e) 0.80%(e)
Net investment
income (loss) 10.66%(e) 10.98% 10.40% 10.93% 11.85% 12.81% 9.79%(e) 9.41%(e)
Expenses, without
waiver and
reimbursement 1.30%(e) 1.29% 1.25% 1.72% 2.85% 3.54% 1.46%(e) 1.53%(e)
Portfolio turnover 45% 176% 175% 189% 213% 104% 34% 42%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Touchstone Touchstone
Value Growth & Touchstone
Plus Income Enhanced
Fund Fund 30 Fund
---------------------------------- ---------------------- --------------------------
For the For the For the
Six Months For the For the Six Months For the Six Months For the
Ended Year Period Ended Year Ended Period
June 30, Ended Ended (b) June 30, Ended (c) June 30, Ended (a)
2000 December December 2000 December 2000 December
(unaudited) 31, 1999 31, 1998 (unaudited) 31, 1999 (unaudited) 31, 1999
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.22 $ 10.18 $ 10.00 $ 10.71 $ 10.46 $ 10.55 $ 10.00
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS:
Net investment
income (loss) 0.02 0.03 0.03 0.29 0.23 0.03 0.05
Net realized and
unrealized gain (loss)
on investments (0.30) 1.49 0.18 (0.62) 0.02 (0.32) 0.55
------------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations (0.28) 1.52 0.21 (0.33) 0.25 (0.29) 0.60
------------------------------------------------------------------------------------------------------------------------------------
LESS: DIVIDENDS
AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income -- (0.03) (0.03) -- -- -- (0.05)
Realized capital gains -- (0.45) -- -- -- -- --
Return of capital -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
TOTAL DIVIDENDS AND
DISTRIBUTIONS -- (0.48) (0.03) -- -- -- (0.05)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 10.94 $ 11.22 $ 10.18 $ 10.38 $ 10.71 $ 10.26 $ 10.55
------------------------------------------------------------------------------------------------------------------------------------
Total return (d) (2.50)% 15.02% 2.11% (3.08)% 2.39% (2.75)% 5.99%
RATIOS AND
SUPPLEMENTAL DATA:
Net assets at end
of period (000s) $ 6,798 $ 7,171 $ 3,168 $53,299 $64,779 $12,508 $13,532
Ratios to average
net assets:
Net expenses 1.15%(e) 1.15% 1.15%(e) 0.85%(e) 0.85% 0.75%(e) 0.75%(e)
Net investment
income (loss) 0.36%(e) 0.26% 0.65%(e) 1.29%(e) 1.49% 0.51%(e) 0.83%(e)
Expenses, without
waiver and
reimbursement 2.17%(e) 2.37% 7.49%(e) 1.27%(e) 1.28% 1.62%(e) 1.77%(e)
Portfolio turnover 28% 101% 100% 45% 65% 23% 9%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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.
(d) Total returns would have been lower had certain expenses not been
reimbursed or waived during the periods shown. (Note 4)
(e) Ratios are annualized.
TOUCHSTONE VARIABLE SERIES TRUST
The accompanying notes are an integral part of the financial statements.
32-33 [SPREAD]
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
Financial Highlights continued
Selected data for a share outstanding:
<TABLE>
<CAPTION>
Touchstone
Balanced
Fund
-----------------------------------------------------------------------------------------------
For the
Six Months
Ended For the For the For the For the For the
June 30, Year Ended Year Ended Year Ended Year Ended Year Ended
2000 December December December December December
(unaudited) 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 13.80 $ 13.96 $ 13.99 $ 12.84 $ 11.48 $ 10.17
------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.24 0.43 0.35 0.31 0.30 0.32
Net realized and
unrealized gain
(loss) on investments 0.17 0.90 0.40 2.05 1.60 2.15
------------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 0.41 1.33 0.75 2.36 1.90 2.47
------------------------------------------------------------------------------------------------------------------------------------
LESS: DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- (0.43) (0.37) (0.32) (0.30) (0.37)
Realized capital gains -- (1.06) (0.41) (0.89) (0.24) (0.79)
Return of capital -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total dividends
and distributions -- (1.49) (0.78) (1.21) (0.54) (1.16)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 14.21 $ 13.80 $ 13.96 $ 13.99 $ 12.84 $ 11.48
------------------------------------------------------------------------------------------------------------------------------------
Total return (b) 2.97% 9.62% 5.44% 18.61% 16.78% 24.56%
RATIOS AND SUPPLEMENTAL
DATA:
Net assets at
end of period (000s) $33,050 $36,716 $41,250 $22,287 $ 6,695 $ 2,895
Ratios to average
net assets:
Net expenses 0.90%(c) 0.90% 0.90% 0.90% 0.90% 0.90%
Net investment income (loss) 3.26%(c) 2.55% 2.67% 2.61% 2.76% 2.87%
Expenses, without waiver
and reimbursement 1.32%(c) 1.35% 1.37% 2.04% 2.72% 3.46%
Portfolio turnover 26% 73% 51% 86% 75% 124%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Touchstone Touchstone Standby
Bond Fund Income Fund
------------------------- ----------------------------------------------------------------------------
For the For the
Six Months Six Months
Ended For the Ended For the For the For the For the For the
June 30, Year Ended(a) June 30, Year Ended Year Ended Year Ended Year Ended Year Ended
2000 December 2000 December December December December December
(unaudited) 31, 1999 (unaudited) 31, 1999 31, 1998 31, 1997 31, 1996 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.98 $ 10.20 $ 9.92 $ 10.01 $ 10.00 $ 10.01 $ 10.02 $ 10.03
------------------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income
(loss) 0.94 0.76 0.27 0.56 0.55 0.54 0.52 0.56
Net realized and
unrealized gain
(loss) on investments (0.63) (0.89) (0.01) (0.09) 0.01 (0.01) (0.01) (0.01)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 0.31 (0.13) 0.26 0.47 0.56 0.53 0.51 0.55
------------------------------------------------------------------------------------------------------------------------------------
LESS: DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income -- (0.09) (0.27) (0.56) (0.55) (0.54) (0.52) (0.56)
Realized capital gains -- -- -- -- -- -- -- --
Return of capital -- -- -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
Total dividends
and distributions -- (0.09) (0.27) (0.56) (0.55) (0.54) (0.52) (0.56)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $ 10.29 $ 9.98 $ 9.91 $ 9.92 $ 10.01 $ 10.00 $ 10.01 $ 10.02
------------------------------------------------------------------------------------------------------------------------------------
Total return (b) 3.11% (1.28)% 3.00% 4.86% 5.71% 5.41% 5.18% 5.90%
RATIOS AND SUPPLEMENTAL
DATA:
Net assets at
end of period (000s) $33,269 $34,700 $25,478 $29,479 $26,450 $17,562 $ 9,105 $ 5,790
Ratios to average
net assets:
Net expenses 0.75%(c) 0.75% 0.50%(c) 0.50% 0.50% 0.50% 0.50% 0.50%
Net investment
income (loss) 6.42%(c) 6.04% 6.14%(c) 5.65% 5.47% 5.42% 5.15% 5.59%
Expenses, without
waiver and
reimbursement 1.04%(c) 1.07% 0.81%(c) 0.87% 0.95% 1.48% 1.54% 1.73%
Portfolio turnover 8% 45% 41% 56% 328% 251% 143% 159%
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The Fund commenced operations on January 1, 1999.
(b) Total returns would have been lower had certain expenses not been
reimbursed or waived during the periods shown. (Note 4)
(c) Ratios are annualized.
TOUCHSTONE VARIABLE SERIES TRUST
The accompanying notes are an integral part of the financial statements.
34-35 [SPREAD]
<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 Value Plus Fund commenced
operations on May 1, 1998. 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 its separate accounts and to a separate
account of Columbus Life Insurance Company ("Columbus Life") as a funding
vehicle for certain variable universal life insurance policies issued by
Columbus Life through the separate account.
As of June 30, 2000, Western-Southern, its direct subsidiary, Columbus Life, and
its indirect subsidiary, Touchstone Advisors, Inc., collectively 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 under consistently applied procedures in accordance with
procedures established by the Trustees of the Trust. Such procedures include the
use of independent pricing services, which use prices based upon yields or
prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. All debt
securities with a remaining maturity of less than 60 days are valued at
amortized cost, which approximates market value.
36
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
--------------------------------------------------------------------------------
FOREIGN CURRENCY VALUE 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 as soon as the Trust is informed of the ex-dividend date.
Interest income, which includes the amortization of premium and accretion of
discount, if any, is recorded on an accrual basis. Dividend and interest income
is recorded net of foreign taxes where recovery of such taxes is not assured.
DIVIDENDS AND DISTRIBUTIONS. 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. These differences, which may result
in distribution reclassifications, are primarily due to non-deductible
organization costs, passive foreign investment companies (PFIC), foreign
currency transactions, losses deferred due to wash sales, and excise tax
regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid-in capital. Undistributed net
investment income and accumulated net realized 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.
37
<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, 2000, the following Funds had the following open forward foreign currency
and spot contracts:
Unrealized
Contracts To In Exchange Appreciation/
Fund Name Maturity Deliver/Receive For Value (Depreciation)
Touchstone
Balanced Fund
Sales 07/31/00 GBP 117,800 $184,946 $178,416 $ 6,530
--------------------------------------------------------------------------------
GBP -- Great Britain Pound
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.
EXPENSES. Expenses incurred by the Trust with respect to any two or more Funds
in the Trust are prorated to each Fund in the Trust, except where allocations of
direct expenses to each Fund can otherwise be made fairly. Expenses directly
attributable to a Fund are charged to that Fund.
38
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
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.
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISOR. The Trust has an investment advisory agreement with
Touchstone Advisors, Inc. (the "Advisor"), a subsidiary of Western-Southern Life
Assurance Company ("Western-Southern"). Under the terms of the investment
advisory agreement, each Fund pays an investment advisory fee that is computed
daily and paid monthly. For the six months ended June 30, 2000, each Fund
incurred investment advisory fees equal on an annual basis to the following
percentages of the daily net assets of the Fund:
<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>
Rate 0.80% 0.80% 0.95% 0.65% 0.60% 0.75%
-------------------------------------------------------------------------------------------------
</TABLE>
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%
--------------------------------------------------------------------------------
39
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
--------------------------------------------------------------------------------
Notes to Financial Statements continued
Subject to review and approval by the Board of Trustees, the Advisor has entered
into certain sub-advisory agreements for the investment advisory services in
connection with the management of each of the Funds. The Advisor pays each
sub-advisor a fee for services provided using an annual rate, as specified
below, that is computed daily and paid monthly based on average daily net
assets. As of June 30, 2000, the following sub-advisory agreements were in
place:
<TABLE>
<CAPTION>
<S> <C>
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, LLC 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
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%
</TABLE>
* 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 acted in a sub-advisory capacity until May 1,
2000). Touchstone Balanced Fund of the Touchstone Series Trust was liquidated
and closed as of May 1, 2000.
Fort Washington Investment Advisors, Inc., and Todd Investment Advisors, Inc.
are affiliates of the Advisor and of Western-Southern.
40
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
--------------------------------------------------------------------------------
SPONSOR. The Trust, on behalf of each Fund, has entered into a Sponsor Agreement
with the Advisor. The Advisor provides oversight of the various service
providers to the Trust, including the Trust's administrator, custodian and
transfer agent. The Advisor receives a fee from each Fund equal on an annual
basis to 0.20% of average daily net assets of that Fund. The Advisor has waived
all fees under the Sponsor Agreement through December 31, 2000. The Sponsor
Agreement may be terminated by the Sponsor or by the Trust on not less than 30
days prior written notice.
TRUSTEES. Each Trustee who is not an "interested person" (as defined in the Act)
of the Trust, receives an aggregate of $5,000 annually, plus $1,000 per meeting
attended, as well as reimbursement for reasonable out-of-pocket expenses, from
the Trust and from certain funds of Touchstone Strategic Trust and Touchstone
Investment Trust. For the six months ended June 30, 2000, the Trust incurred
$15,564 in Trustee fees which was prorated to each fund.
4. EXPENSE REIMBURSEMENTS
The Advisor has agreed to waive its fees under the Sponsor Agreement or
reimburse certain other fees and expenses of each Fund, such that after such
waivers and reimbursements, the aggregate operating expenses of each Fund do not
exceed that Fund's expense cap (the "Expense Cap"). For this purpose, operating
expenses include amortization of organizational expenses but are exclusive of
interest, taxes, brokerage commissions and other portfolio transaction expenses,
capital expenditures and extraordinary expenses. Each Fund's Expense Cap, as
calculated on an annualized basis, and as a percentage of average daily net
assets of the Fund, is listed below. Also listed are the amounts of fees waived
by the Advisor under the Sponsor Agreement and amounts reimbursed by the Advisor
to each Fund for the six months ended June 30, 2000:
<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%
Sponsor
fees waived $13,150 $24,239 $38,512 $23,418 $14,698 $ 6,634
Amount of
reimbursement $36,023 -- $59,356 $29,044 $33,544 $27,272
---------------------------------------------------------------------------------------------------------
<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>
Voluntary
expense limit 0.85% 0.75% 0.90% 0.75% 0.50%
Sponsor
fees waived $57,271 $12,095 $34,161 $33,287 $27,642
Amount of
reimbursement $61,931 $40,285 $37,701 $15,633 $14,673
---------------------------------------------------------------------------------------------------------
</TABLE>
The Advisor has agreed that it will continue to waive fees and reimburse each
Fund as described above through December 31, 2000.
41
<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, 2000 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 $14,688,756 $16,072,056 $25,557,101 $9,659,802 $6,318,042 $1,813,455
Proceeds from
sales $13,955,686 $21,247,942 $25,763,019 $15,700,456 $4,779,063 $2,402,220
---------------------------------------------------------------------------------------------------------
<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 $25,969,846 $2,831,708 $7,939,563 $1,631,072 $14,535,369
Proceeds from
sales $34,645,265 $3,680,395 $12,245,356 $6,215,795 $7,733,379
---------------------------------------------------------------------------------------------------------
</TABLE>
Purchases and sales of U.S. government obligations (excluding short-term
investments) for the six months ended June 30, 2000 were as follows:
Touchstone Touchstone Touchstone
Growth & Balanced Bond
Income Fund Fund Fund
Cost of
purchases $158,160 $829,352 $849,551
Proceeds from
sales $66,927 $1,315,896 $240,000
-------------------------------------------------------------------------------
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, 2000,
the Touchstone Bond Fund held restricted securities valued at $667,317 by the
Trustees, representing 2.01% of net assets. Acquisition date and cost of each
are as follows:
Acquisition Date Cost
Mercantile Safe Deposit 3/28/85 $ 33,804
Central America, Series F 8/1/86 115,000
Central America, Series G 8/1/86 115,000
Central America, Series H 8/1/86 115,000
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 II
Portfolio. As part of a subsequent reorganization, these securities were
redeemed in kind and acquired by the Touchstone Bond Fund.
42
<PAGE>
TOUCHSTONE VARIABLE SERIES TRUST
--------------------------------------------------------------------------------
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, in a tax-free exchange,
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.
The following is a summary by Fund of the unrealized appreciation and
undistributed net investment income acquired from each series of Select Advisors
Portfolios as of the substitution date, as well as the number of shares issued
from each Portfolio from the substitution:
Undistributed
Touchstone Variable Series Unrealized Net Investment Shares
Trust Fund (New Fund) Appreciation Income Issued
Growth & Income $3,085,239 $1,995,493 7,140,970
Bond 697,382 4,714,604 3,770,359
8. SUPPLEMENTARY DATA
A special meeting of shareholders of the Touchstone Balanced Fund was held on
February 21, 2000 to vote on a proposal to approve a sub-advisory agreement
between Touchstone Advisors, Inc. and OpCap Advisors, Inc. 995,803 shares of the
Touchstone Balanced Fund, representing 53.34% of the outstanding shares of the
Fund, were present by proxy. The results of the vote taken on the proposal are
shown below:
SUB-ADVISORY AGREEMENT WITH OPCAP ADVISORS, INC.
# of Shares Voted % of Shares Voted
Affirmative 932,401 93.63%
Against 9,960 1.00%
Abstain 53,442 5.37%
TOTAL 995,803 100.00%
43
<PAGE>
NOTES
--------------------------------------------------------------------------------
