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SUPPLEMENT TO PROSPECTUS
AND STATEMENT OF ADDITIONAL INFORMATION
OF SELECT ADVISORS TRUST A AND TRUST C
IN CONNECTION WITH TOUCHSTONE GROWTH & INCOME FUND A AND FUND C
THIS SUPPLEMENT IS DATED SEPTEMBER 1, 1997.
The Prospectuses and Statements of Additional Information of Select
Advisors Trust A and Trust C, each dated May 1, 1997, are hereby amended and
supplemented as follows:
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NEW PORTFOLIO ADVISOR
On August 15, 1997, the Board of Trustees of the Portfolio Trust
approved the appointment of Scudder, Stevens & Clark, Inc. ("Scudder") as the
Portfolio Advisor to the Growth and Income Portfolio (the "Portfolio") effective
September 1, 1997. Scudder replaced Fort Washington Investment Advisors, Inc.,
who resigned as Portfolio Advisor to the Portfolio as of August 31, 1997. The
Portfolio Advisory Agreement with Scudder will terminate on December 29, 1997,
unless it is approved by shareholders of the Portfolio prior to that date. A
meeting of shareholders is scheduled for September 18, 1997, to consider, among
other things, approval of such agreement with Scudder.
Initially, the rate of the fee to be paid to Scudder for its services
will remain 0.45% of the average net assets of the Portfolio. If shareholders
approve the Portfolio Advisory Agreement, the fee rate will increase to 0.50% of
the first $150 million of the Portfolio's average net assets and 0.45% of the
Portfolio's average net assets in excess of $150 million. The increase in the
fee rate will become effective upon the date on which it is approved by
shareholders.
INFORMATION ABOUT SCUDDER
Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. All of the outstanding voting and nonvoting
securities of Scudder are held of record by Stephen R. Beckwith, Juris Padegs,
Daniel Pierce, and Edmond D. Villani in their capacity as the representatives of
the beneficial owners of such securities (the "Representatives"), pursuant to a
Security Holders' Agreement among Scudder, the beneficial owners of securities
of Scudder and such Representatives. Pursuant to the Security Holders'
Agreement, the Representatives have the right to reallocate shares among the
beneficial owners from time to time. All Managing Directors of Scudder own
voting and nonvoting stock and all Principals of Scudder own nonvoting stock.
The Portfolio will be managed by a team of Scudder investment
professionals. They are supported by Scudder's large staff of economists,
research analysts, traders and other investment specialists who work in
Scudder's offices across the United States and abroad. Scudder believes its team
approach benefits investors by bringing together many disciplines and leveraging
Scudder's extensive resources.
Lead Product Manager, Robert T. Hoffman, leads a team of investment
professionals responsible for the management of the Portfolio and other
portfolios managed in a similar fashion. Mr. Hoffman is
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responsible for setting the Portfolio's stock investing strategy and overseeing
the Portfolio's day-to-day operations. Mr. Hoffman, who joined Scudder in 1990
as a portfolio manager, has 13 years of experience in the investment industry,
including several years of pension fund management experience.
Lori Ensinger, Lead Portfolio Manager, joined the portfolio management
team in 1993. Ms. Ensinger focuses on stock selection and investment strategy.
She has worked as a portfolio manager since 1983, and joined Scudder in 1993.
Deborah Chaplin, Portfolio Manager, has focused on stock selection and
investment strategy since joining the portfolio management team in 1997. Ms.
Chaplin, who joined Scudder in 1996 has over four years of experience as a
securities analyst and portfolio manager. Prior to joining Scudder, Ms. Chaplin
was a research fellow in the Faculty of Letters at Kyoto University, Japan.
Benjamin W. Thorndike, Portfolio Manager, is the Portfolio's chief
analyst and strategist for convertible securities. Mr. Thorndike, who has 18
years of investment experience, joined Scudder in 1983 as a portfolio manager.
Kathleen T. Millard, Portfolio Manager, has been involved in the
investment industry since 1983 and has worked as a portfolio manager since 1986.
Ms. Millard, who joined the portfolio management team and Scudder in 1991,
focuses on strategy and stock selection.
As of July 31,1997, Scudder had assets under management in excess of
$125 billion. Scudder's principal executive offices are located at 345 Park
Avenue, New York, New York.
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ACQUISITION OF SCUDDER
On June 26, 1997, Scudder entered into a Transaction Agreement (the
"Transaction Agreement") with Zurich Insurance Company ("Zurich"). Under the
terms of the Transaction Agreement, Zurich will acquire a majority interest in
Scudder, and Zurich Kemper Investments, Inc. ("ZKI"), a Zurich subsidiary, will
become part of Scudder. Scudder's name will be changed to Scudder Kemper
Investments, Inc. ("Scudder Kemper"). The foregoing are referred to as the
"Transactions." The headquarters of Scudder Kemper will be in New York. Edmond
D. Villani, Scudder's CEO, will continue as CEO of Scudder Kemper and will
become a member of Zurich's Corporate Executive Board.
As required by the 1940 Act, the Portfolio Advisory Agreement with
Scudder will terminate upon consummation of the Transactions. At a meeting held
on August 15, 1997, the Board of Trustees of the Portfolio Trust approved the
selection of Scudder Kemper as portfolio advisor to the Portfolio subsequent to
the Transactions and approved a new Portfolio Advisory Agreement. A meeting of
shareholders is scheduled for September 18, 1997, to consider, among other
things, approval of the new Portfolio Advisory Agreement with Scudder Kemper.
The new Portfolio Advisory Agreement will become effective upon the later of the
consummation of the Transactions and approval of the new Portfolio Advisory
Agreement with Scudder Kemper by shareholders. The new Portfolio Advisory
Agreement with Scudder Kemper will not change any of the terms of the Portfolio
Advisory Agreement with Scudder that will then be in effect, except for the
effective date and the change to Scudder's name.
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INFORMATION ABOUT TRANSACTIONS AND SCUDDER KEMPER
Under the Transaction Agreement, Zurich will pay $866.7 million in cash
to acquire two-thirds of Scudder's outstanding shares and will contribute ZKI to
Scudder for additional shares, following which Zurich will have a 79.1% fully
diluted equity interest in the combined business. Zurich will then transfer a
9.6% fully diluted equity interest in Scudder Kemper to a compensation pool for
the benefit of Scudder and ZKI employees, as well as cash and warrants on Zurich
shares for award to Scudder employees, in each case subject to five-year vesting
schedules. After giving effect to the Transactions, current Scudder shareholders
will have a 29.6% fully diluted equity interest in Scudder Kemper and Zurich
will have a 69.5% fully diluted interest in Scudder Kemper.
The purchase price for Scudder or for ZKI in the Transactions is
subject to adjustment based on the impact to revenues of non-consenting clients,
and will be reduced if the annualized investment management fee revenues
(excluding the effect of market changes, but taking into account new assets
under management) from clients at the time of closing, as a percentage of
revenue run rates as of June 30, 1997 (the "Revenue Run Rate Percentage"), is
less than 90%.
The names, addresses and principal occupations of the initial directors
of Scudder Kemper are as follows: Lynn S. Birdsong, 345 Park Avenue, New York,
New York, Managing Director of Scudder; Cornelia M. Small, 345 Park Avenue, New
York, New York, Managing Director of Scudder; and Edmond D. Villani, 345 Park
Avenue, New York, New York, President and Chief Executive Officer of Scudder;
Lawrence W. Cheng, Mythenquai 2, Zurich, Switzerland, Chief Investment Officer
for Investments and Institutional Asset Management and the corporate functions
of Securities and Real Estate for Zurich; Steven M. Gluckstern, Mythenquai 2,
Zurich, Switzerland, responsible for Reinsurance, Structured Finance, Capital
Market Products and Strategic Investments, and a member of the Corporate
Executive Board of Zurich; Rolf Hueppi, Mythenquai 2, Zurich, Switzerland,
Chairman of the Board and Chief Executive Officer of Zurich; and Markus
Rohrbasser, Mythenquai 2, Zurich, Switzerland, Chief Financial Officer and
member of the Corporate Executive Board of Zurich. The initial Executive
Committee members will be Messrs. Birdsong and Villani (Chairman) and Messrs.
Cheng and Rohrbasser.
The Transactions are subject to a number of conditions, including
approval by Scudder shareholders; the Revenue Run Rate Percentages of Scudder
and ZKI being at least 75%; Scudder and ZKI having obtained director and
shareholder approvals from registered funds representing 90% of assets of such
funds under management as of June 30, 1997; the absence of any restraining order
or injunction preventing the Transactions, or any litigation challenging the
Transactions that is reasonably likely to result in an injunction or
invalidation of the Transactions; and the continued accuracy of the
representations and warranties contained in the Transaction Agreement. The
Transactions are expected to close during the fourth quarter of 1997.
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office is located at
Mythenquai 2, 8002 Zurich, Switzerland. Historically, Zurich's earnings have
resulted from its operations as an insurer as well as from its ownership of its
subsidiaries and affiliated companies (the "Zurich Insurance Group"). Zurich and
the Zurich Insurance Group provide an extensive range of insurance products and
services, and have branch offices and subsidiaries in more than 40 countries
throughout the world. Zurich Insurance Group is particularly strong in the
insurance of international companies and organizations. Over the past few years,
Zurich's
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global presence, particularly in the United States, has been strengthened by
means of selective acquisitions.
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AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
In connection with the assumption by Scudder of the role of Portfolio
Advisor to the Portfolio, the Board of Trustees of the Portfolio Trust, at a
meeting held on August 15, 1997, approved an amendment (the "Amendment") to the
investment advisory agreement (the "Investment Advisory Agreement"), dated
September 9, 1994, between the Portfolio Trust, on behalf of the Portfolio, and
the Advisor. If approved by shareholders, the Amendment will increase the fee
paid by the Portfolio Trust, on behalf of the Portfolio, to the Advisor. The
Amendment will increase the fee on the first $150 million of average daily net
assets of the Portfolio, on an annual basis, from 0.75% of such average daily
net assets of the Portfolio, to 0.80% of such average daily net assets of the
Portfolio. The fee on average daily net assets of the Portfolio in excess of
$150 million will remain 0.75% of such assets. The Amendment will not change the
Investment Advisory Agreement in any other respect.
The Amendment will become effective upon the date on which such
Amendment is approved by shareholders. A meeting of shareholders is scheduled
for September 18, 1997, to consider, among other things, approval of the
amendment to the Portfolio's Investment Advisory Agreement described above.
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INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
In connection with the assumption by Scudder of the role of Portfolio
Advisor to the Portfolio, the Board of Trustees of the Portfolio Trust, at a
meeting held on August 15, 1997, approved certain changes and additions to the
investment objectives, policies and restrictions of the Portfolio. The text that
follows replaces or adds to the corresponding text in the Prospectus or
Statement of Additional Information. Unless otherwise specified, the following
changes will become effective on October 1, 1997.
AMENDMENT TO INVESTMENT OBJECTIVES AND POLICIES
PROSPECTUS - "INVESTMENT OBJECTIVES, POLICIES AND RISKS -- GROWTH & INCOME
PORTFOLIO"
The investment objective of the Portfolio is long term capital
appreciation and dividend income by investing primarily in a diversified
portfolio of dividend-paying common stocks, preferred stock and securities
convertible into common stocks. The Fund may also purchase such securities which
do not pay current dividends but which offer prospects for growth of capital and
future income. Convertible securities (which may be current coupon or zero
coupon securities) are bonds, notes, debentures, preferred stocks and other
securities which may be converted or exchanged at a stated or determinable
exchange ratio into underlying shares of common stock. The Portfolio may also
invest in non-convertible preferred stocks consistent with the Portfolio's
objective. Under normal conditions, at least 80% of the Portfolio's total assets
will be invested in common stocks and at least 65% of the Portfolio's total
assets will be invested in common stocks that, at the time of investment, will
be expected to pay regular dividends.
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The Portfolio will generally invest a majority of its assets in common
stocks of issuers with total market capitalization of $1 billion or greater at
the time of purchase, but may invest in securities of companies having various
levels of market capitalization, including smaller companies whose securities
may be more volatile and less liquid than securities issued by larger companies
with higher levels of net worth. Investments will be in companies in various
industries.
The Portfolio may also invest up to 20% of its total assets in foreign
securities, including securities of foreign issuers in the form of ADRs. The
Portfolio may not invest more than 5% of its total assets in the securities of
companies based in an emerging market. See "Risk Factors and Certain Investment
Techniques -- Foreign Securities" and "--Risks Associated with `Emerging
Markets' Securities."
The Portfolio may invest under normal circumstances up to 20% of its
total assets in preferred stocks, convertible preferred stock, bonds,
convertible debentures and other fixed-income instruments (the "Fixed Income
Instruments"). Within this 20% limitation, the Portfolio may invest in any
combination of Fixed Income Instruments subject to the following additional
limitations: (1) the Portfolio may invest up to 20% of its total assets in
convertible preferred stock and convertible debentures rated at least Ba by
Moody's or BB by S&P, (2) the Portfolio may invest up to 20% of its total assets
in non-convertible fixed income instruments rated at least Baa by Moody's or BBB
by S&P and (3) the Portfolio may invest up to 5% of its total assets in
non-convertible debt rated below Baa by Moody's or BBB by S&P. See "Risk Factors
and Certain Investment Techniques -- `Convertible Securities' and `Medium and
Lower Rated ("Junk Bonds") and Unrated Debt Securities."
The Fund may invest up to 10% of its total assets in real estate
investment trusts ("REITs"), which pool investors' funds for investment
primarily in income-producing real estate or real estate-related loans or
interests. See "Risk Factors and Certain Investment Techniques -- Real Estate
Investment Trusts."
The Portfolio may also invest up to 5% of its total assets in Standard
& Poor's Depositary Receipts ("SPDRs") in order to invest uncommitted cash
balances, to maintain liquidity to meet shareholder redemptions, or to minimize
trading costs. SPDRs represent ownership in a unit investment trust that holds a
portfolio of stocks designed to track the performance of the S&P 500 Index.
SPDRs are traded on the American Stock Exchange. See "Risk Factors and Certain
Investment Techniques - Standard & Poor's Depositary Receipts."
ADDITIONAL DISCLOSURE ABOUT CONVERTIBLE SECURITIES, REITS AND SPDRS AND
ASSOCIATED RISK FACTORS
PROSPECTUS - "RISK FACTORS AND CERTAIN INVESTMENT TECHNIQUES"
Convertible Securities. Convertible securities may offer higher income
than the common stocks into which they are convertible and include fixed-income
or zero coupon debt securities, which may be converted or exchanged at a stated
or determinable exchange ratio into underlying shares of common stock. Prior to
their conversion, convertible securities may have characteristics similar to
both non-convertible debt securities and equity securities.
While convertible securities generally offer lower yields than
non-convertible debt securities of similar quality, their prices may reflect
changes in the value of the underlying common stock. Convertible securities
entail less credit risk than the issuer's common stock.
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Real Estate Investment Trusts. REITs can generally be classified as
equity REITs, mortgage REITs and hybrid REITs. Equity REITs, which invest the
majority of their assets directly in real property, derive their income
primarily from rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs, which invest the
majority of their assets in real estate mortgages, derive their income primarily
from interest payments on real estate mortgages in which they are invested.
Hybrid REITs combine the characteristics of both equity REITs and mortgage
REITs.
Investment in REITs is subject to risks similar to those associated
with the direct ownership of real estate (in addition to securities markets
risks). REITs are sensitive to factors such as changes in real estate values and
property taxes, interest rates, cash flow of underlying real estate assets,
supply and demand, and the management skill and creditworthiness of the issuer.
REITs may also be affected by tax and regulatory requirements.
Standard & Poor's Depositary Receipts ("SPDRs"). The Growth & Income
Portfolio may invest in SPDRs. SPDRs typically trade like a share of common
stock and provide investment results that generally correspond to the price and
yield performance of the component common stocks of the S&P 500 Index. There can
be no assurance that this can be accomplished as it may not be possible for the
Portfolio to replicate and maintain exactly the composition and relative
weightings of the S&P 500 Index securities. SPDRs are subject to the risks of an
investment in a broadly based portfolio of common stocks, including the risk
that the general level of stock prices may decline, thereby adversely affecting
the value of such investment.
REVISIONS TO INVESTMENT RESTRICTION FOR GROWTH & INCOME PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION - "INVESTMENT OBJECTIVES, POLICIES,
RESTRICTIONS AND RISKS -- INVESTMENT RESTRICTIONS"
Investment restriction number 4 relating to investments in real estate
will no longer apply with respect to the Portfolio. The following two investment
restrictions will replace investment restriction no. 4 ONLY with respect to the
Portfolio:
"As a matter of fundamental policy, the Growth & Income Portfolio
(Growth & Income Fund) may not:
4a) purchase or sell real estate (except that (a) the Portfolio may
invest in (i) securities of entities that invest or deal in real
estate, mortgages, or interests therein and (ii) securities secured by
real estate or interests therein and (b) the Portfolio may hold and
sell real estate acquired as a result of the Portfolio's ownership of
securities;
4b) purchase or sell interests in oil, gas or mineral leases,
commodities or commodity contracts (except futures and option
contracts) in the ordinary course of business.
The changes to the Portfolio's fundamental investment restrictions described
above will become effective upon the date on which such changes are approved by
shareholders. A meeting of shareholders is scheduled for September 18, 1997, to
consider, among other things, approval of the changes to the Portfolio's
fundamental investment restrictions described above.
446806.01
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