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T O U C H S T O N E
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THE TOUCHSTONE FAMILY OF FUNDS
LOGO
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TOUCHSTONE STANDBY INCOME FUND
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SEMIANNUAL REPORT
JUNE 30, 1996
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Dear Fellow Shareholder:
After posting many excellent gains through year-end and well into January,
the stock market, as of this writing, has contracted a case of the jitters. An
important contributor has been uncertainty about the direction of interest rates
with a growing bias toward the upside. The financial markets thought they
noticed signs of vigor in the overall economy and were increasingly concerned
about the effect rising commodity prices might have on future inflation. Gross
domestic product, which measures our economy's momentum, gained strength.
Despite some instability in equity prices, dips in the market have remained
modest by historical standards. Although market buoyancy can cause sleeplessness
for some investors, it can also afford opportunities that can add value to our
funds.
The economy is growing and inflation appears to be in check, which is an
encouraging climate for financial markets. Stocks should continue to provide
decent returns for investors with a long-term perspective, but it is important
to remember that the financial markets do not often go straight up as they did
in 1995. As of this date, it is difficult to tell if the market correction has
run its course. However, good markets never continue forever without some
unexpected, temporary interruption.
On July 1st we launched our new Internet Web site at
"WWW.TOUCHSTONEFUNDS.COM" to help keep Touchstone shareholders, contract owners,
investment professionals and potential investors better informed. With the click
of a mouse, Internet users can explore specific Touchstone mutual fund or
variable annuity* products (including prices), read about portfolio managers,
and even begin to create hypothetical investment strategies and model
portfolios. The site also allows users to become familiar with Touchstone
through reprints of news articles from major financial publications.
Providing easy-to-use navigation tools, quick-loading graphics and valuable
information, the site incorporates the best aspects of a Web site. Touchstone
believes that technology is a valuable tool for our clients, and a Web site is a
natural tool for Touchstone to create to ensure we our meeting our clients'
needs.
Thank you for your continued confidence and investment in the Touchstone
Family of Funds and Variable Annuities*.
Sincerely,
Edward G. Harness
President and Chief Executive Officer
Touchstone Family of Funds
* Variable annuities are underwritten by Western-Southern Life Assurance
Company, Cincinnati, Ohio.
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TOUCHSTONE STANDBY INCOME FUND
Over the course of the six months ended June 30, 1996, several investment
management strategies and techniques materially affected the Touchstone Standby
Income Fund's performance. Cash equivalents, as measured by the Merrill Lynch
91-Day Treasury Index, rose 2.5% while the return of the IBC Donoghue Money
Market Index rose equally by 2.5%. Total return (net of fees and expenses) for
the Touchstone Standby Income Fund was 2.3%.
As the ultra-short fixed income manager of the Touchstone Standby Income
Fund, Fort Washington Investment Advisors maintained its core strategy
throughout the semiannual period. In response to rising interest rates, Fort
Washington cut the average duration of its holdings from 0.5 years to 0.2 years.
This shortening was accomplished by selling longer dated corporate and asset
backed securities and rotating into the commercial paper sector. This strategy
protected principal, made the fund more liquid and allowed Fort Washington to
reinvest at higher rates as they became available.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOUCHSTONE STANDBY MERRILL LYNCH 91-DAY IBC DONOGHUE
<S> <C> <C> <C>
Income Fund Treasury Index Money Market Index
Sep-94 10000 10000 10000
Oct-94 10047 10043 10036
Nov-94 10073 10082 10075
Dec-94 10115 10133 10117
Jan-95 10171 10184 10161
Feb-95 10214 10233 10207
Mar-95 10248 10285 10254
Apr-95 10295 10332 10301
May-95 10354 10386 10348
Jun-95 10400 10439 10398
Jul-95 10447 10489 10443
Aug-95 10482 10542 10489
Sep-95 10527 10588 10536
Oct-95 10584 10637 10581
Nov-95 10639 10685 10627
Dec-95 10682 10744 10673
Jan-96 10750 10793 10718
Feb-96 10772 10836 10762
Mar-96 10804 10876 10805
Apr-96 10847 10922 10848
May-96 10893 10971 10891
Jun-96 10937 11016 10934
Total Return
Six Months Ended 6/30/96
(unaudited) 2.30%
Inception to 6/30/96 (unaudited) 9.40%
</TABLE>
Past performance is not predictive of future performance.
STANDBY INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PRINCIPAL (NOTE 1)
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<C> <S> <C>
ASSET BACKED SECURITIES (13.9%)
$205,081 Advanta Mortgage Loan Trust, 6.14%,
10/25/08................................... $ 204,440
153,973 Daimler Benz Grantor Trust, 3.9%, 10/15/98... 153,247
25,000 Federal Home Loan Marketing Assn., 5.35%,
7/31/96.................................... 24,881
166,423 Honda Auto Receivables Grantor Trust, 6.2%,
12/15/00................................... 166,742
295,342 Premier Auto Trust, 6.85%, 10/4/97........... 295,950
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TOTAL ASSET-BACKED SECURITIES (COST $844,598)...........
845,260
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CORPORATE BONDS (18.4%)
295,000 Commonwealth Edison, 8.93%, 8/15/96.......... 296,143
250,000 Corporate Assn. of Tractor Dealers, 5.35%,
8/28/96.................................... 247,763
125,000 Merrill Lynch, 5%, 12/15/96.................. 124,575
250,000 Student Loan Marketing Assn., 5.2%,
7/19/96.................................... 249,999
200,000 Student Loan Marketing Assn., 5.425%,
11/27/96................................... 200,280
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TOTAL CORPORATE BONDS (COST $1,117,282)................. 1,118,760
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COMMERCIAL PAPER (66.5%)
250,000 Boston Edison Corp., 5.46%, 7/9/96........... 248,711
300,000 Comdisco, Inc., 5.55%, 8/15/96............... 297,271
300,000 Conagra Inc., 5.5%, 7/9/96................... 299,038
300,000 Crown Cork & Seal Co., Inc., 5.6%, 7/25/96... 298,647
295,000 Hanson Financial, 5.5%, 7/8/96............... 293,738
295,000 IES Diversified, Inc., 5.5%, 7/22/96......... 292,881
300,000 JB Hunt Transport, 5.59%, 7/3/96............. 299,674
290,000 Pacificorp, 5.48%, 7/8/96.................... 288,190
300,000 Pennsylvania Power & Light, 5.6%, 7/29/96.... 298,553
250,000 Ryder Systems, Inc., 5.48%, 7/2/96........... 249,163
295,000 Texas Utilities Corp., 5.55%, 7/12/96........ 293,999
290,000 Textron Financial, 5.48%, 7/10/96............ 288,146
290,000 Torchmark Corporation, 5.43%, 7/8/96......... 288,513
295,000 UOP, 5.5%,7/3/96............................. 293,513
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TOTAL COMMERCIAL PAPER
(COST $4,030,037)....................................... 4,030,037
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TOTAL INVESTMENTS AT VALUE (98.8%)
(COST $5,991,917)(a).................................... 5,994,057
CASH AND OTHER ASSETS NET OF LIABILITIES (1.2%).........
74,391
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NET ASSETS (100.0%)..................................... $6,068,448
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</TABLE>
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(a) The aggregate cost for federal income tax purposes is $5,991,917, the
aggregate gross unrealized appreciation is $2,874, and the aggregate gross
unrealized depreciation is $734, resulting in net unrealized appreciation of
$2,140.
The accompanying notes are an integral part of the financial statments.
1
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TOUCHSTONE STANDBY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
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<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (Note 1) (Cost $5,991,917) $ 5,994,057
Cash 25,697
Receivable for:
Capital stock sold 29,157
Interest 25,306
Deferred organization expenses 42,289
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Total assets 6,116,506
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LIABILITIES:
Distribution payable from income 126
Payable to Advisor (Note 1) 38,815
Payable to Administrator 3,622
Accrued expenses and other liabilities 5,495
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Total liabilities 48,058
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NET ASSETS: $ 6,068,448
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Net asset value, offering and redemption price per share:
($6,068,448 DIVIDED BY 607,581 shares) $ 9.99
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</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
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<TABLE>
<S> <C>
INTEREST INCOME (NOTE 1): $ 164,853
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EXPENSES:
Transfer agent fees $ 27,295
Administration and fund accounting fees (Note 2) 13,093
Auditing fees 6,860
Amortization of organization expenses (Note 1) 6,386
Investment advisory fees (Note 2) 6,150
Sponsor fee (Note 2) 5,840
Blue Sky registration fees 5,136
Custody 3,775
Trustee fees (Note 2) 829
Miscellaneous 4,082
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Total expenses 79,446
Waiver of Sponsor fee (Note 2) (5,840)
Reimbursement from Advisor (Note 3) (51,708)
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Net expenses 21,898
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NET INVESTMENT INCOME 142,955
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REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments 2,071
Net change in unrealized depreciation on investments (12,435)
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Net realized and unrealized loss (10,364)
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS: $ 132,591
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</TABLE>
The accompanying notes are an integral part of the financial statements.
2
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TOUCHSTONE STANDBY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
For the Six For the Year
Months Ended Ended
June 30, 1996 December 31,
(unaudited) 1995
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<S> <C> <C>
OPERATIONS:
Net investment income $ 142,955 $ 291,217
Net realized gain (loss) on investments 2,071 (2,225)
Net change in unrealized appreciation (depreciation) on
investments (12,435) 1,156
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Net increase in net assets resulting from operations 132,591 290,148
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DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (146,634) (298,212)
Net realized capital gain -- (2,181)
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(146,634) (300,393)
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SHARE TRANSACTIONS:
Proceeds from shares sold 258,569 1,258,933
Reinvestment of dividends 145,611 320,130
Cost of shares redeemed (231,540) (707,060)
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Net increase from investors' transactions 172,640 872,003
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TOTAL CHANGES IN NET ASSETS 158,597 861,758
NET ASSETS:
Beginning of period 5,909,851 5,048,093
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End of period $ 6,068,448 $ 5,909,851
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NET ASSETS CONSIST OF:
Paid-in capital 6,064,967 5,895,809
Undistributed net investment income 2,047 2,244
Accumulated net realized loss on investments (706) (2,777)
Net unrealized appreciation of investments 2,140 14,575
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Net assets applicable to shares outstanding $ 6,068,448 $ 5,909,851
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SHARES OUTSTANDING:
Shares sold 25,864 125,731
Reinvestment of dividends 14,565 31,929
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40,429 157,660
Shares redeemed (23,149) (70,601)
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Net incease 17,280 87,059
Beginning of period 590,301 503,242
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End of period 607,581 590,301
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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TOUCHSTONE STANDBY INCOME FUND
FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
For the Six For the Year For the Period
Selected data for a share outstanding Months Ended Ended October 3, 1994(a)
throughout June 30, 1996 December 31, to December 31,
the period: (unaudited) 1995 1994
--------------- ------------- -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.01 $ 10.03 $ 10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.25 0.55 0.11
Net realized and unrealized gain (loss) on
investments (0.02) (0.02) 0.03
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Total from investment operations 0.23 0.53 0.14
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LESS: DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (0.25) (0.55) (0.11)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.99 $ 10.01 $ 10.03
------ ------ ------
------ ------ ------
TOTAL RETURN (B) 2.29% 5.71% 1.40%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $ 6,068 $ 5,910 $ 5,048
Ratios to average net assets (c):
Expenses 0.75% 0.75% 1.00%
Net investment income 4.88% 5.32% 4.54%
Portfolio turnover (not annualized) 179% 142% 0%
</TABLE>
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(a) Commencement of operations.
(b) Total return is not annualized. Total return is calculated assuming a
purchase of shares on the first day and a sale of shares on the last day of
the period, and reinvestment of all dividends and distributions.
(c) Ratios are annualized. If the waiver and reimbursement had not been in place
for the periods ended June 30, 1996, December 31, 1995 and 1994, and after
consideration of state expense limitations the ratios of expenses to average
net assets would have been 2.50%.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Touchstone Standby Income Fund, (the "Fund") a series of Select Advisors
Trust A (the "Trust") is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company which was organized as a
Massachusetts business trust on February 7, 1994. The Declaration of Trust
permits the Trustees to issue an unlimited number of full and fractional shares
of beneficial interests in the Fund. At June 30, 1996, Western-Southern Life
Assurance Company ("Western-Southern") owned 87.1% of the Standby Income Fund.
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
Fund:
a) INVESTMENT VALUATION. Debt securities are valued by a pricing service
which determines valuations based upon market transactions for normal,
institutional-size trading units of similar securities. All short-term
securities with a remaining maturity of less than 60 days are valued at
amortized cost.
b) INTEREST INCOME. Interest income, which includes the amortization of
premium and accretion of discount, if any, is recorded on an accrual basis.
c) DIVIDENDS AND DISTRIBUTIONS. Dividends are declared daily and paid
monthly. Distributions to shareholders of net realized capital gains, if any are
declared and paid annually.
4
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TOUCHSTONE STANDBY INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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d) ORGANIZATION EXPENSE. Organization expenses were deferred and are being
amortized by the Fund on a straight-line basis over a five-year period from
commencement of operations. The Fund's organizational fees payable includes fees
and expenses of $62,078 payable to Touchstone Advisors, Inc., a subsidiary of
Western-Southern. This amount is reduced by any amounts receivable by the Fund
from Touchstone Advisors, Inc. The amount paid by the Trust on any redemption by
Touchstone Advisors or any other then-current holder of the organizational seed
capital shares ("Initial Shares") of the Fund will be reduced by a portion of
any unamortized organization expenses of the Fund, determined by the proportion
of the number of the Initial Shares of the Fund redeemed to the number of the
Initial Shares of the Fund outstanding after taking into account any prior
redemptions of the Initial Shares of the Fund.
e) FEDERAL TAXES. The Fund is treated as a separate entity for federal
income tax purposes. The Fund's policy is to comply with the provisions of the
Internal Revenue Code of 1986, as amended, applicable to regulated investment
companies and to distribute substantially all of its income, including net
realized capital gains, if any, within the prescribed time periods. Accordingly,
no provision for federal income tax is necessary. The Fund has a capital loss
carryforward of $2,777 that expires in December 2003.
f) OTHER. Securities transactions are recorded on a trade date basis. For
financial and tax reporting purposes, realized gains and losses are determined
on the basis of specific lot identification.
2. TRANSACTIONS WITH AFFILIATES
a) INVESTMENT ADVISORY FEES. The Trust has an investment advisory
agreement with Touchstone Advisors, Inc. (the "Advisor"). Under the terms of the
investment advisory agreement, the Fund pays a fee on an annual basis equal to
0.25% of the average daily net assets of the Fund. Fort Washington Investment
Advisors, Inc., an affiliate of the Advisor, is the sub-advisor for the Fund.
b) SPONSOR. The Trust, on the behalf of each Fund, has entered into a
Sponsor Agreement with Touchstone Advisors, Inc. (the "Sponsor"), an affiliate
of the Distributor. The Sponsor provides oversight of the various service
providers to the Trust, including the Trust's administrator, custodian and
transfer agent. The Sponsor receives a fee from each Fund equal on an annual
basis to 0.20% of the average daily net assets of that Fund. The Sponsor has
advised the Trust that it will waive all fees under the Sponsor Agreement
through April 30, 1997.
c) ADMINISTRATOR AND FUND ACCOUNTANT. The Trust retains Signature
Financial Services Inc. ("Signature") to serve as administrator and fund
accountant. Certain officers of Signature serve as officers of the Trust.
Signature provides administrative services necessary for the operations of the
Fund, including the preparation and filing of all documents required by the
Trust for compliance with applicable laws and regulations; and arranging for the
maintenance of books, records and custody of the Fund and paying the
compensation of the Trust's officers affiliated with Signature. For these
services, Signature receives a fee equal on an annual basis to 0.16% of the
aggregate average daily net assets of the Fund. Rates are reduced on a sliding
scale when average daily net assets exceeds $100 million. In addition, the Fund
is subject to a minimum annual fee of $25,000 and out-of-pocket expenses.
d) TRUSTEES. Each Trustee who is not an "interested person" (as defined by
the Act) of the Trust receives in aggregate $5,000 annually plus $1,000 per
meeting attended, as well as reimbursement for reasonable out-of-pocket
expenses, from the Trust and from Select Advisors Trust C, Select Advisors
Portfolios, and Select Advisors Variable Insurance Trust, which are included in
separate reports.
3. EXPENSE REIMBURSEMENTS
The Advisor has agreed to reimburse the Fund so that, following such
reimbursement, the aggregate total operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) of the Fund are not
greater, on an annual basis, than 0.75% of the average daily net assets of the
Fund.
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
Purchases and sales of investment securities (excluding short-term
investments) amounted to $3,159,842 and $3,863,757 respectively, for the period
ended June 30, 1996.
5
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DISTRIBUTOR
Touchstone Securities, Inc.
311 Pike Street
Cincinnati, Ohio 45202
(800) 669-2796
INVESTMENT ADVISOR
Touchstone Advisors, Inc.
311 Pike Street
Cincinnati, Ohio 45202
ADMINISTRATOR
Signature Financial Services, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 8518
Boston, Massachusetts 02266-8518
CUSTODIAN
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
LEGAL COUNSEL
Frost & Jacobs
2500 PNC Center
201 East 5th Street
Cincinnati, Ohio 45202
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T O U C H S T O N E
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FORM 7078-9606 THE MARK OF EXCELLENCE IN INVESTMENT MANAGEMENT-SM-
