<PAGE> 1
[LOGO TOUCHSTONE]
------------------------------
The Touchstone Family of Funds
-------------
Select Advisors Trust A
- Touchstone Emerging Growth Fund A
- Touchstone International Equity Fund A
- Touchstone Growth & Income Fund A
- Touchstone Balanced Fund A
- Touchstone Income Opportunity Fund A
- Touchstone Bond Fund A
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
Dear Fellow Shareholder:
The current "golden age" of moderate growth, low interest rates, low
inflation, and robust corporate earnings -- has been good for stocks. Let's not
forget, though, that this kind of market will not always be around. Certainly
not when there are so many unfamiliar situations surrounding us: the Asian
currency crisis, the year 2000 issue, tensions in the Middle East, or simply
that stocks have been so hot for so long. Simply speaking, there's nothing the
market hates more than uncertainty, and we've experienced a lot of it lately.
Most people attribute the stock market's exceptionally strong rise and
recent volatility to the huge flood of money that has poured into equity mutual
funds. The 1995-97 total of nearly $600 billion new cash invested in equity
funds is an impressive figure. It has added 70% of the total assets accumulated
by the mutual fund industry over its entire 72 years of existence. But the
dominant reason why investors have wanted to put so much money into stocks is
that the last three years have been the most favorable for corporate profit
growth in well over 50 years.
It's times like these that the Touchstone brand of investment management
makes sense. Because the truth is, no matter where the market's go, there are
always good stocks available. At Touchstone, we hire only the best portfolio
managers who look for these companies one at a time, using every possible means
of rigorous financial analysis to hands-on, face-to-face research, in quest of
an edge nobody else has. That's how Touchstone helps investors get where they
need to go.
We've been through volatile times before, and there's a good chance we'll
have to face them again. The particulars may change, but the commitment of each
and every member of the Touchstone administrative and portfolio team -- and the
discipline they employ -- remains the same.
Please review the enclosed financial statements for portfolio updates and
performance numbers for important information about the investment you have
chosen.
Going forward, I urge you to be reasonable in your expectations. Now, more
than ever, it's important to take a long-term view. So I ask that you carefully
review the shorter-term risks associated with your investments and make sure
they truly fit your comfort level. Your financial advisor can help you adjust
your investment strategy to meet any of your changing needs.
We appreciate your continued confidence and investment in the Touchstone
Family of Funds and Variable Annuities(1).
Sincerely,
/s/ Edward G. Harness
- -------------------------------------
Edward G. Harness
President and Chief Executive Officer
Touchstone Family of Funds
P.S. Please visit us on the World Wide Web at www.touchstonefunds.com
- ---------------
(1) Touchstone Variable Annuities are underwritten by Western-Southern Life
Assurance Company, Cincinnati, Ohio, Touchstone Family of Funds and Variable
Annuities are distributed by Touchstone Securities, Inc., member NASD and SIPC.
<PAGE> 3
TOUCHSTONE EMERGING GROWTH FUND A
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected Touchstone Emerging
Growth Fund A's performance. Small capitalization stocks, as measured by the
Russell 2000, rose 22.4% while the total return (net of fees, expenses and the
sales charge of 5.75%) for the Touchstone Emerging Growth Fund A was 24.7%.
As the value-style manager of the Touchstone Emerging Growth Fund A, David L.
Babson's core strategy continued to stress bottom up fundamental analysis in
identifying low risk stocks with attractive return potential. The last part of
1997 demonstrated some of the benefits that come with this lower risk investment
style. When the markets tumbled in October, value stocks in the portfolio held
up well. Investment highlights in 1997 included good performance from Dime
Bancorp (+105%) and office furniture manufacturer Herman Miller (+93%). Babson
believes that future investment performance will increasingly depend on stock
selection capabilities. Going forward, Babson thinks the market environment will
be much more difficult and that only careful stock selection will produce
reasonable gains.
As the growth-style manager of the Touchstone Emerging Growth Fund A, Westfield
Capital Management continued to find companies with good growth prospects.
Delving a bit deeper, Westfield believes that the second half of 1997 was the
beginning of a major reversal in relative performance, favoring small-cap
issues. On an annual basis, 1997 was the first time since 1993 that smaller-cap
indices outperformed their larger brethren; and not so coincidentally, the
majority of active managers also beat index funds. This year's third quarter
showed the Russell 2000 returning double the S&P 500 and over four times the Dow
Industrials. Unfortunately, the increased visibility of various Asian troubles
derailed this momentum. Westfield believes that the Asian troubles were
counter-intuitive and therefore temporary because the very names being bought in
this flight to quality are the companies with the heaviest foreign profit
exposures.
The Asian phenomenon did, however, prompt several sector shifts within the
Westfield portfolio. First, their exposure to semiconductor equipment,
semiconductors, and cellular handset infrastructure were quickly cut back.
Shortly thereafter Westfield almost completely moved out of the energy service
companies and boosted positions in REITS, consumer products, systems integration
service companies, and various broadcast arenas.
<TABLE>
<CAPTION>
CDA/Wiesenberger
Small
Measurement Touchstone Company
Period Emerging Russell Growth
(Fiscal Year Growth 2000 Avg -
Covered) Fund A Index MF
<S> <C> <C> <C>
Sep-94 9425 10000 10000
Dec-94 9681 9813 9950
Mar-95 10093 10265 10512
Jun-95 10735 11227 11450
Sep-95 11733 12336 12785
Dec-95 11865 12603 13072
Mar-96 12391 13246 13917
Jun-96 12947 13909 15025
Sep-96 12599 13956 15319
Dec-96 13119 14682 15758
Mar-97 12585 13923 14745
Jun-97 14811 16180 17262
Sep-97 17253 18588 20184
Dec-97 17343 17965 19166
</TABLE>
1
<PAGE> 4
TOUCHSTONE INTERNATIONAL EQUITY FUND A
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone
International Equity Fund A's performance. International equity stocks, as
measured by the MSCI EAFE Index, rose 2.0% while the total return (net of fees,
expenses and the sales charge of 5.75%) for the Touchstone International Equity
Fund A was 8.9%.
As the international equity manager of the Touchstone International Equity Fund
A, BEA Associates attributes the Fund's performance to primarily two decisions.
First, they were underweighted in Japan and developed Asia and, secondly, they
had an allocation to the emerging markets in Latin America.
At year-end, the Japan weighting in the portfolio was approximately one-third
that of MSCI EAFE. Given that nation's economic doldrums and the resulting drop
in equity prices, this approach proved fruitful (the Japanese market fell 24% in
1997). Stock selection in Japan, which emphasized globally oriented companies
(such as Sony, Honda, Nintendo and Toyota) and avoided most domestic sectors,
was also effective in adding value. BEA's relatively small exposure to most
other Asian markets contributed positively to performance as well, mainly in the
second half of the year.
A byproduct of reducing Asian positions was an increase in the portfolio's
allocation to Europe, which benefited from particularly good stock selection.
Holdings in France, Sweden, Italy, the Netherlands and Portugal performed best
throughout the year. As for emerging markets, their bias toward Latin America,
specifically Brazil and Mexico, boosted the portfolio's returns.
<TABLE>
<CAPTION>
CDA/Wiesenberger
Measurement International
Period Touchstone MSCI Equity
(Fiscal Year International EAFE Avg -
Covered) Fund A Index MF
<S> <C> <C> <C>
Sep-94 9425 10000 10000
Dec-94 8596 9898 9687
Mar-95 8256 10082 9858
Jun-95 8615 10156 10582
Sep-95 9001 10579 11295
Dec-95 9050 11007 11495
Mar-96 9598 11325 12164
Jun-96 9806 11505 12739
Sep-96 9731 11490 12880
Dec-96 10101 11673 13435
Mar-97 10253 11490 13450
Jun-97 11479 12990 15099
Sep-97 12011 12907 16032
Dec-97 11674 11905 15112
</TABLE>
TOUCHSTONE GROWTH & INCOME FUND A
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Growth &
Income Fund A's performance. Growth & Income stocks, as measured by the S&P 500
Index, rose 33.4% while the total return (net of fees, expenses and the 5.75%
sales charge) for the Touchstone Growth & Income Fund A was 13.7%.
As the growth and income manager of the Touchstone Growth & Income Fund A,
Scudder Kemper Investments, Inc., focused exclusively on their relative dividend
yield discipline. This strategy requires Scudder to concentrate on stocks that
pay dividends, buy stocks when their yields are above the market yield, and sell
them when they fall below. This discipline, which is successful in identifying
when stocks are overvalued or undervalued, caused Scudder to modestly
underweight the healthcare sector, but to focus exclusively on pharmaceutical
stocks rather than the weaker performing HMO's or medical device companies. The
strategy paid off, as the Fund's pharmaceutical stocks were exceptional
performers, outperforming the sector and the broad market.
Electric and telephone utilities were also important contributors to the Fund's
performance, as a "flight to quality" later in the year, aided further by
declining interest rates and merger activity in the industry, led these stocks
to outperform the market. The Fund is overweighted in both electrics and
telephones. The largest sector exposure in the Fund is in financial stocks,
representing about 23% of the portfolio. This overweight added value, as finance
stocks were one of the stronger performing sectors of the market.
<TABLE>
<CAPTION>
CDA/Wiesenberger
Growth
Touchstone &
Measurement Growth Current
Period & S&P Income
(Fiscal Year Income 500 Avg -
Covered) Fund A Index MF
<S> <C> <C> <C>
Sep-94 9425 10000 10000
Dec-94 9444 9998 9837
Mar-95 10406 10972 10594
Jun-95 11160 12019 11428
Sep-95 12049 12974 12248
Dec-95 12763 13756 12823
Mar-96 13676 14494 13525
Jun-96 14114 15144 13969
Sep-96 14419 15612 14370
Dec-96 14927 16914 15415
Mar-97 14278 17367 15583
Jun-97 15959 20399 17768
Sep-97 17460 21927 19305
Dec-97 18016 22557 19477
</TABLE>
2
<PAGE> 5
TOUCHSTONE BALANCED FUND A
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Balanced
Fund A's performance. Growth and value stocks, as measured by the S&P 500 Index,
rose 33.4% and government and corporate bonds, as measured by the Lehman
Brothers Aggregate Index rose 9.7% while the total return (net of fees, expenses
and the sales charge of 5.75%) for the Touchstone Balanced Fund A was 12.4%.
As the balanced fund manager of the Touchstone Balanced Fund A, OpCap Advisors
employed a disciplined, bottom-up approach to stock selection which has not
changed since their inception as manager of the fund in April of 1997. Their
investment horizon is long-term, with an average holding period of 3 to 4 years.
An example of this long-term horizon is Shaw Industries, which has recently been
implementing a retail strategy with excellent prospects for the long term, but
which resulted in a $33 million fourth quarter charge against earnings for the
closing of approximately 100 retail stores. Profitability should now increase,
and the long-term strategy and financial prospects remain in place.
On the fixed income side of the portfolio, OpCap Advisors remained focused on
issue selection, believing this to be the best way to consistently add value in
the fixed income markets over time. The Fund was well diversified among sectors,
issues and maturities and was comprised of high quality securities that offer
superior total return prospects over a variety of market scenarios. Their
holdings were in well structured securities that have particularly benefited
during this annual period of declining interest rates. OpCap continued to favor
long-term non-government debt such as commercial banking and public financing
issues, believing that they offer superior return prospects.
<TABLE>
<CAPTION>
Measurement Touchstone Lehman CDA/Wiesenberger
Period Balanced S&P Brothers Balanced
(Fiscal Year Fund 500 Government/Corporate Avg.-
Covered) A Index Index MF
<S> <C> <C> <C> <C>
Sep-94 9425 10000 10000 10000
Dec-94 9453 9998 10038 9893
Mar-95 9965 10972 10544 10501
Jun-95 10922 12019 11187 11245
Sep-95 11582 12974 11406 11849
Dec-95 11654 13756 11892 12337
Mar-96 12065 14494 11681 12656
Jun-96 12209 15144 11748 12954
Sep-96 12606 15612 11965 13300
Dec-96 13618 16914 12324 13973
Mar-97 13575 17367 12256 13964
Jun-97 15028 20399 12707 15380
Sep-97 15929 21927 13131 16397
Dec-97 16240 22557 13514 16577
</TABLE>
TOUCHSTONE INCOME OPPORTUNITY FUND A
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Income
Opportunity Fund A's performance. Corporate high yield bonds, as measured by the
CDA/Wiesenberger Corporate High Yield Mutual Fund Average, rose 12.6%,
international bonds, as measured by the CDA/Wiesenberger Global Income Mutual
Fund Average rose 3.3% while corporate bonds in general, as measured by the
Lehman Brothers Corporate Bond Index, rose 10.2%. Total return (net of fees,
expenses and the sales charge of 4.75%) for the Touchstone Income Opportunity
Fund A was 4.3%.
3
<PAGE> 6
As the manager of the Touchstone Income Opportunity Fund A, Alliance Capital
Management continued to concentrate its portfolio strategy on investments in
emerging market corporates, emerging market sovereign and U.S. corporate high
yield debt. Alliance reports that during the second half of 1997, U.S. economic
activity remained healthy but started to slow from its rapid pace. The Federal
Reserve did not take any action regarding interest rates due to improving
inflation fundamentals and a stronger dollar coupled with turmoil in Asian
financial markets. Global economic growth suffered a setback in the fourth
quarter due to sharply devalued currencies and falling equity markets in
Southeast Asia and Hong Kong. The lack of clear and prompt responses to these
crises led many investors to re-evaluate the risk premiums associated with
emerging market debt. Many countries such as Brazil, Russia and Argentina faced
increased scrutiny and their debt came under pressure.
The portfolio's investments in emerging market debt were diversified across
Latin America, Southeast Asia and Eastern Europe with only two countries having
an exposure of over 6%. Alliance chose to invest in Southeast Asia and emerging
market corporates because they had been the best sources of yield in 1997. They
continue to closely monitor their small position in Thailand and also their
holdings in Indonesia, where they feel they own some of the stronger, more
diversified credits. Due, however, to the increased uncertainty and volatility
in emerging market debt, Alliance decided to increase the Fund's weighting in
U.S. corporate high yield to 40%. This high yield market continued to be driven
by new issuance and provided strong returns in the second half of the year. As
emerging market prices improve, Alliance will selectively sell down their
exposure there and continue to increase their U.S. high yield percentage.
<TABLE>
<CAPTION>
CDA/Wiesenberger
Touchstone Lehman CDA/Wiesenberger Corporate
Measurement Income Brothers International High
Period Opportunity Corporate Bond Yield
(Fiscal Year Fund Bond Avg - Avg -
Covered) A Index MF MF
<S> <C> <C> <C> <C>
Sep-94 9525 10000 10000 10000
Dec-94 8838 10043 9878 9881
Mar-95 8357 10638 10234 10316
Jun-95 9708 11429 10784 10850
Sep-95 10334 11699 11018 11180
Dec-95 10888 12277 11483 11515
Mar-96 11474 11960 11466 11811
Jun-96 12149 12014 11687 12036
Sep-96 13125 12254 12107 12582
Dec-96 13791 12681 12550 13030
Mar-97 14037 12553 12323 13103
Jun-97 14953 13070 12668 13764
Sep-97 15718 13582 12977 14483
Dec-97 15100 13978 12961 14674
</TABLE>
TOUCHSTONE BOND FUND A
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Bond
Fund A's performance. Corporate bonds, as measured by the Lehman Brothers
Aggregate Index, rose 9.7% while the return of the CDA/Wiesenberger Corporate
Bond (Investment Grade) Mutual Fund Average rose 8.9%. Total return (net of
fees, expenses and the sales charge of 4.75%) for the Touchstone Bond Fund A was
2.2%.
As the core fixed income manager of the Touchstone Bond Fund A, Fort Washington
Investment Advisors continued to emphasize overweightings in high quality
corporate bonds and underweightings in mortgage-backed securities. This strategy
should provide above market returns at current interest rate levels if the
mortgage sector continues to experience above average re-financing activity.
The last quarter of 1997, however, was one of tremendous dislocation and
transition for the U.S. Bond market. The currency and economic instability in
East Asia caused downgrades and large price deterioration in what were once high
quality, bellwether credits in the marketplace. Bonds of issuers in Korea, Hong
Kong, Malaysia and Thailand suffered serious price declines as investors
worldwide sold their bonds. This unprecedented plunge in highly rated securities
fueled a simultaneous flight to quality as investors repositioned their assets
in U.S. Treasury bonds.
<TABLE>
<CAPTION>
CDA/Wiesenberger
Measurement Lehman Corporate
Period Touchstone Brothers Bond
(Fiscal Year Bond Aggregate Avg -
Covered) Fund A Index MF
<S> <C> <C> <C>
Sep-94 9525 10000 10000
Dec-94 9551 10038 9985
Mar-95 10046 10544 10418
Jun-95 10571 11187 11104
Sep-95 10742 11406 11331
Dec-95 11172 11892 11867
Mar-96 10937 11681 11588
Jun-96 10982 11748 11629
Sep-96 11175 11965 11842
Dec-96 11490 12324 12223
Mar-97 11450 12256 12134
Jun-97 11818 12707 12571
Sep-97 12197 13131 12999
Dec-97 12329 13514 13307
</TABLE>
4
<PAGE> 7
SELECT ADVISORS TRUST A
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
TOUCHSTONE TOUCHSTONE TOUCHSTONE TOUCHSTONE
EMERGING INTERNATIONAL GROWTH & TOUCHSTONE INCOME TOUCHSTONE
GROWTH EQUITY INCOME BALANCED OPPORTUNITY BOND
FUND A FUND A FUND A FUND A FUND A FUND A
---------- ------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in corresponding Select
Advisors Portfolios, at value
(Note 1) $4,848,798 $4,653,410 $5,882,451 $3,198,163 $6,892,170 $1,572,246
Deferred organization expenses
(Note 1) 17,164 17,164 17,164 17,164 17,164 17,164
Receivable for fund shares sold 5,086 8,506 21,478 26,119 78,066 29,031
Reimbursement receivable from Sponsor
(Note 3) 120,367 120,246 132,712 121,086 77,719 106,691
---------- ---------- --------- ---------- ---------- ----------
Total assets 4,991,415 4,799,326 6,053,805 3,362,532 7,065,119 1,725,132
---------- ---------- --------- ---------- ---------- ----------
LIABILITIES:
Payable for fund shares redeemed -- -- 26,461 40 800 --
Other accrued expenses 42,742 38,559 47,118 46,727 55,453 40,510
---------- ---------- --------- ---------- ---------- ----------
Total liabilities 42,742 38,559 73,579 46,767 56,253 40,510
---------- ---------- --------- ---------- ---------- ----------
NET ASSETS: $4,948,673 $4,760,767 $5,980,226 $3,315,765 $7,008,866 $1,684,622
========== ========== ========== ========== ========== ==========
Shares outstanding 357,329 417,090 397,027 267,075 709,018 164,839
========== ========== ========== ========= ========== ==========
Net asset value and redemption price
per share $ 13.85 $ 11.41 $ 15.06 $ 12.42 $ 9.89 $ 10.22
========== ========== ========== ========== ========= ==========
Offering price per share $ 14.69 $ 12.11 $ 15.98 $ 13.18 $ 10.38 $ 10.73
========== ========== ========== ========== ========= ==========
Maximum sales load 5.75% 5.75% 5.75% 5.75% 4.75% 4.75%
========== ========== ========== ========== ========= ==========
<CAPTION>
Statements of Operations
For the year ended December 31, 1997
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME ALLOCATED FROM
CORRESPONDING PORTFOLIO (NOTE 1):
Interest income $ 11,528 $ 8,789 $ 8,204 $ 72,420 $ 865,310 $ 127,545
Dividend income 35,541 64,641(a) 82,517 18,418 -- 5,587
--------- ---------- ---------- ---------- ---------- ----------
Total investment income 47,069 73,430 90,721 90,838 865,310 133,132
--------- ---------- ---------- ---------- ---------- ----------
EXPENSES:
Allocated portfolio expenses 59,857 67,979 56,848 39,102 89,083 15,778
Fund accounting and administration 15,324 16,990 16,552 15,324 15,399 16,836
Transfer agent 48,471 41,226 53,463 44,602 56,099 49,324
Registration 12,761 12,678 14,052 12,761 14,111 10,717
Amortization of organization
expenses (Note 1) 9,771 9,771 9,771 9,771 9,771 9,771
Audit 9,752 12,872 11,739 11,234 12,654 12,323
Distribution (Note 2) 9,801 10,363 11,516 6,637 17,453 4,764
Sponsor fee (Note 2) 7,841 8,290 9,209 5,310 13,962 3,811
Printing 2,692 2,609 3,767 9,521 5,668 (2,098)
Trustee (Note 2) 539 601 675 372 994 303
Legal 1,291 1,544 1,854 1,146 2,683 906
Miscellaneous 1,053 1,623 3,130 1,135 4,190 1,393
---------- ---------- --------- --------- ---------- ----------
Total expenses 179,153 186,546 192,576 156,915 242,067 123,828
Waiver of sponsor fees (Note 2) (7,841) (8,290) (9,209) (5,310) (13,962) (3,811)
Reimbursement from sponsor
(Note 3) (112,526) (111,956) (123,503) (115,776) (144,009) (102,880)
---------- ---------- --------- --------- ---------- ----------
NET EXPENSES 58,786 66,300 59,864 35,829 84,096 17,137
---------- ---------- --------- --------- ---------- ----------
NET INVESTMENT INCOME (LOSS) (11,717) 7,130 30,857 55,009 781,214 115,995
----------- ---------- --------- --------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM PORTFOLIO:
Net realized gain 590,394 524,042(b) 652,500 499,632 241,119 2,874
Net change in unrealized
appreciation (depreciation) 538,558 47,371(c) 212,301 (91,281) (458,957) 28,320
---------- ---------- --------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) FROM PORTFOLIO 1,128,952 571,413 864,801 408,351 (217,838) 31,194
---------- ---------- --------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,117,235 $ 578,543 $ 895,658 $ 463,360 $ 563,376 $ 147,189
========== ========== ========= ========== ========== ==========
</TABLE>
- ------------------------------
(a) Net of foreign tax withholding of $7,367.
(b) Includes foreign currency transactions losses of $24,857.
(c) Includes change in unrealized appreciation on foreign currency transactions
and other assets of $371.
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 8
SELECT ADVISORS TRUST A
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOUCHSTONE EMERGING TOUCHSTONE INTERNATIONAL
GROWTH FUND A EQUITY FUND A
---------------------------- ----------------------------
1997 1996 1997 1996
FOR THE YEARS ENDED DECEMBER 31, ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (11,717) $ (3,533) $ 7,130 $ 12,908
Net realized gain (loss) from Portfolio 590,394 213,424 524,042 68,388
Net change in unrealized appreciation
(depreciation) from Portfolio 538,558 138,123 47,371 248,918
---------- ---------- ---------- ----------
Net increase in net assets resulting from
operations 1,117,235 348,014 578,543 330,214
---------- ---------- ---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (204) (3,534) (5,903) (18,430)
Realized capital gains (453,141) (178,581) (331,108) --
Distributions in excess of net investment income -- -- -- (1,433)
Distributions in excess of capital gains -- (88,436) --
---------- ---------- ---------- ----------
Total dividends and distributions (453,345) (270,551) (337,011) (19,863)
---------- ---------- ---------- ----------
SHARE TRANSACTIONS (NOTE 1):
Proceeds from shares sold 1,370,965 1,395,367 888,137 589,156
Reinvestment of dividends and distributions 381,960 209,586 334,346 19,556
Cost of shares redeemed (341,399) (1,329,192) (151,885) (87,410)
---------- ---------- ---------- ----------
Net increase from share transactions: 1,411,526 275,761 1,070,598 521,302
---------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 2,075,416 353,224 1,312,130 831,653
NET ASSETS:
Beginning of period 2,873,257 2,520,033 3,448,637 2,616,984
---------- ---------- ---------- ----------
End of period $4,948,673 $2,873,257 $4,760,767 $3,448,637
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Paid-in capital $3,896,709 $2,492,187 $4,283,036 $3,207,208
Undistributed (distributions in excess of) net
investment income -- -- (14,430) (1,546)
Accumulated net realized gain (loss) from
Portfolio 44,431 (87,905) 58,978 (142,837)
Net unrealized appreciation (depreciation) from
Portfolio 1,007,533 468,975 433,183 385,812
---------- ---------- ---------- ----------
Net assets applicable to shares outstanding $4,948,673 $2,873,257 $4,760,767 $3,448,637
========== ========== ========== ==========
SHARES OUTSTANDING (NOTE 1):
Shares sold 105,014 117,342 76,304 57,446
Reinvestment of dividends and distributions 28,399 18,223 29,458 1,867
---------- ---------- ---------- ----------
133,413 135,565 105,762 59,313
Shares redeemed (24,818) (105,541) (13,074) (8,018)
---------- ---------- ---------- ----------
Net increase 108,595 30,024 92,688 51,295
Beginning of period 248,734 218,710 324,402 273,107
---------- ---------- ---------- ----------
End of period 357,329 248,734 417,090 324,402
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 9
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
TOUCHSTONE GROWTH & TOUCHSTONE TOUCHSTONE INCOME TOUCHSTONE
INCOME FUND A BALANCED FUND A OPPORTUNITY FUND A BOND FUND A
--------------------------- --------------------------- --------------------------- ---------------------------
1997 1996 1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 30,857 $ 14,495 $ 55,009 $ 40,049 $ 781,214 $ 286,106 $ 115,995 $ 39,846
652,500 314,565 499,632 74,879 241,119 213,344 2,874 (4,117)
212,301 69,117 (91,281) 180,857 (458,957) 102,483 28,320 (11,119)
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
895,658 398,177 463,360 295,785 563,376 601,933 147,189 24,610
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
(36,450) (20,854) (55,865) (46,692) (773,302) (268,997) (117,358) (45,753)
(602,875) (292,380) (473,050) (72,596) (271,405) (144,529) (203) (1,318)
-- -- (8,806) -- -- -- (6,489) --
-- -- -- -- (242,082) -- -- --
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
(639,325) (313,234) (537,721) (119,288) (1,286,789) (413,526) (124,050) (47,071)
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
2,927,262 2,031,071 931,397 517,003 7,560,967 3,252,056 1,926,355 380,914
629,283 306,020 533,585 117,896 1,042,480 355,988 86,946 43,460
(1,492,018) (262,704) (160,287) (227,905) (5,450,248) (586,768) (1,172,671) (103,680)
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
2,064,527 2,074,387 1,304,695 406,994 3,153,199 3,021,276 840,630 320,694
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
2,320,860 2,159,330 1,230,334 583,491 2,429,786 3,209,683 863,769 298,233
3,659,366 1,500,036 2,085,431 1,501,940 4,579,080 1,369,397 820,853 522,620
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
$ 5,980,226 $3,659,366 $3,315,765 $2,085,431 $ 7,008,866 $4,579,080 $ 1,684,622 $ 820,853
=========== ========== ========== ========== =========== ========== =========== =========
$ 5,506,335 $3,455,188 $3,061,544 $1,763,814 $ 7,537,857 $4,397,914 $ 1,654,030 $ 820,298
2,166 777 2,506 402 5,651 -- 1,097 1,362
83,816 27,793 30,260 8,479 (235,330) 21,521 (2,317) (4,299)
387,909 175,608 221,455 312,736 (299,312) 159,645 31,812 3,492
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
$ 5,980,226 $3,659,366 $3,315,765 $2,085,431 $ 7,008,866 $4,579,080 $ 1,684,622 $ 820,853
=========== ========== ========== ========== =========== ========== =========== =========
194,618 143,229 68,410 43,756 677,881 302,698 189,458 37,352
42,510 21,488 43,278 9,580 100,000 33,129 8,503 4,279
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
237,128 164,717 111,688 53,336 777,881 335,827 197,961 41,631
(100,955) (17,984) (11,763) (18,586) (488,860) (55,165) (113,852) (10,139)
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
136,173 146,733 99,925 34,750 289,021 280,662 84,109 31,492
260,854 114,121 167,150 132,400 419,997 139,335 80,730 49,238
----------- ---------- ---------- ---------- ----------- ---------- ----------- ---------
397,027 260,854 267,075 167,150 709,018 419,997 164,839 80,730
=========== ========== ========== ========== =========== ========== =========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 10
SELECT ADVISORS TRUST A
Financial Highlights
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
TOUCHSTONE EMERGING GROWTH
FUND A
-------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31, 1997 1996 1995 1994(a)
- ----------------------------------------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.55 $11.52 $10.11 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (0.03) 0.01 (0.01) 0.16
Net realized and unrealized gain (loss) on investments 3.71 1.20 2.29 0.11
------ ------ ------ ------
Total from investment operations 3.68 1.21 2.28 0.27
------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (0.01) (0.03) (0.15)
Realized capital gains (1.38) (1.17) (0.84) (0.01)
------ ------ ------ ------
Total dividends and distributions (1.38) (1.18) (0.87) (0.16)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.85 $11.55 $11.52 $10.11
====== ====== ====== ======
TOTAL RETURN(b) 32.20% 10.56% 22.56% 2.72%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $4,949 $2,873 $2,520 $1,038
Ratios to average net assets(c)
Net expenses 1.50% 1.50% 1.50% 1.75%(e)
Net investment income (loss) (0.30%) (0.12%) (0.05%) 6.10%(e)
<CAPTION>
TOUCHSTONE BALANCED
FUND A
-------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31, 1997 1996 1995 1994(a)
- ----------------------------------------------------------------------------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.48 $11.34 $ 9.97 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.27 0.30 0.31 0.08
Net realized and unrealized gain (loss) on investments 2.09 1.59 1.99 (0.05)
------ ------ ------ ------
Total from investment operations 2.36 1.89 2.30 0.03
------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.30) (0.30) (0.33) (0.06)
Realized capital gains (2.12) (0.45) (0.60) --
------ ------ ------ ------
Total dividends and distributions (2.42) (0.75) (0.93) (0.06)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.42 $12.48 $11.34 $ 9.97
====== ====== ====== ======
TOTAL RETURN(b) 19.25% 16.86% 23.24% 0.30%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $3,316 $2,085 $1,502 $1,001
Ratios to average net assets(c)
Net expenses 1.35% 1.35% 1.35% 1.60%(e)
Net investment income 2.07% 2.19% 2.39% 2.75%(e)
</TABLE>
- ------------------------------
(a) The Fund commenced operations on October 3, 1994.
(b) Total return is calculated without the effects of a sales charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the periods shown.
(c) Includes the Fund's proportionate share of the corresponding Portfolio's
expenses. If the waiver and reimbursement had not been in place for the
periods listed and after consideration of state expense limitations, the
ratios of expenses to average net assets would have been higher.
(d) Per share amounts have been calculated using the average share method.
(e) Ratios are annualized.
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 11
<TABLE>
<CAPTION>
------------------------------------- ------------------------------------
TOUCHSTONE INTERNATIONAL EQUITY TOUCHSTONE GROWTH & INCOME
FUND A FUND A
---------------------------------- -----------------------------------
1997 1996 1995 1994(a) 1997 1996 1995(d) 1994(a)
------ ------ ------ ------- ------ ------ ------- -------
<C> <C> <C> <C> <C> <C> <C> <C>
$10.63 $ 9.58 $ 9.12 $10.00 $14.03 $13.14 $10.02 $ 10.00
------ ------ ------ ------ ------ ------ ------ -------
0.02 0.05 0.21 -- 0.09 0.12 0.05 0.86
1.64 1.06 0.47 (0.88) 2.78 2.12 3.46 (0.84)
------ ------ ------ ------ ------ ------ ------ -------
1.66 1.11 0.68 (0.88) 2.87 2.24 3.51 0.02
------ ------ ------ ------ ------ ------ ------ -------
(0.02) (0.06) (0.22) -- (0.11) (0.12) (0.16) --
(0.86) -- -- -- (1.73) (1.23) (0.23) --
------ ------ ------ ------ ------ ------ ------ -------
(0.88) (0.06) (0.22) -- (1.84) 1.35 (0.39) --
------ ------ ------ ------ ------ ------ ------ -------
$11.41 $10.63 $ 9.58 $ 9.12 $15.06 $14.03 $13.14 $ 10.02
====== ====== ====== ====== ====== ====== ====== =======
15.57% 11.61% 5.29% (8.80%) 20.70% 16.95% 35.14% 0.20
$4,761 $3,449 $2,617 $2,282 $5,980 $3,659 $1,500 $ 20
1.60% 1.60% 1.60% 1.85% (e) 1.30% 1.30% 1.30% 1.55%(e)
0.17% 0.42% 0.11% (0.36%)(e) 0.67% 0.55% 0.56% 0.56%(e)
<CAPTION>
TOUCHSTONE INCOME OPPORTUNITY TOUCHSTONE BOND
FUND A FUND A
---------------------------------- -----------------------------------
1997 1996 1995 1994(a) 1997 1996 1995(d) 1994(a)
------ ------ ------ ------- ------ ------ ------- -------
<C> <C> <C> <C> <C> <C> <C> <C>
$10.90 $ 9.83 $ 9.08 $10.00 $10.17 $10.61 $ 9.88 $ 10.00
------ ------ ------ ------ ------ ------ ------ -------
1.24 1.12 1.19 0.22 0.61 0.71 0.56 1.15
(0.23) 1.38 0.77 (0.94) 0.11 (0.43) 1.07 (1.12)
------ ------ ------ ------ ------ ------ ------ -------
1.01 2.50 1.96 (0.72) 0.72 0.28 1.63 0.03
------ ------ ------ ------ ------ ------ ------ -------
(1.22) (1.12) (1.21) (0.20) (0.66) (0.70) (0.86) (0.15)
(0.80) (0.31) -- -- (0.01) (0.02) (0.04) --
------ ------ ------ ------ ------ ------ ------ -------
(2.02) (1.43) (1.21) (0.20) (0.67) (0.72) (0.90) (0.15)
------ ------ ------ ------ ------ ------ ------ -------
$ 9.89 $10.90 $ 9.83 $ 9.08 $10.22 $10.17 $10.61 $ 9.88
====== ====== ====== ====== ====== ====== ====== =======
9.49% 26.66% 23.19% (7.20%) 7.30% 2.85% 16.95% 0.28%
7,009 $4,579 $1,369 $ 926 $1,685 $ 821 $ 523 $ 16
1.20% 1.20% 1.20% 1.45%(e) 0.90% 0.90% 0.90% 1.15%(e)
11.19% 11.29% 12.42% 8.60%(e) 6.08% 6.01% 6.21% 5.58%(e)
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 12
SELECT ADVISORS TRUST A
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Select Advisors Trust A (the "Trust") was organized as a Massachusetts
business trust on February 7, 1994, and is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company.
The Declaration of Trust permits the Trust to issue an unlimited number of
full and fractional shares of beneficial interest of one or more series.
The Trust consists of seven funds: Touchstone Emerging Growth Fund A (the
"Emerging Growth Fund"), Touchstone International Equity Fund A (the
"International Equity Fund"), Touchstone Growth & Income Fund A (the "Growth &
Income Fund"), Touchstone Balanced Fund A (the "Balanced Fund"), Touchstone
Income Opportunity Fund A (the "Income Opportunity Fund"), Touchstone Bond Fund
A (the "Bond Fund") (each, a "Fund"), and Touchstone Standby Income Fund (the
"Standby Income Fund"). The Standby Income Fund is included in a separate annual
report.
The Trust seeks to achieve the investment objectives of each Fund presented
in this report by investing all the investable assets of the Fund in a
corresponding Portfolio of Select Advisors Portfolios (the "Portfolio Trust"),
an open-end management investment company. Each Portfolio has the same
investment objectives as the corresponding Fund. These Portfolios are,
respectively, Emerging Growth Portfolio, International Equity Portfolio, Growth
& Income Portfolio, Balanced Portfolio, Income Opportunity Portfolio and Bond
Portfolio.
The value of each Fund's investment in the corresponding Portfolio reflects
the Fund's proportionate interest in the net assets of the Portfolio at December
31, 1997.
<TABLE>
<CAPTION>
INCOME
EMERGING INTERNATIONAL GROWTH & BALANCED OPPORTUNITY BOND
GROWTH FUND A EQUITY FUND A INCOME FUND A FUND A FUND A FUND A
------------- ------------- ------------- -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Percentage interest in
corresponding
Portfolio 63.8% 54.2% 21.5% 54.0% 64.4% 10.3%
</TABLE>
The financial statements of each Portfolio, including the schedule of
investments, are included elsewhere in this report and should be read in
conjunction with the corresponding Fund's financial statements.
As of December 31, 1997, Touchstone Advisors, Inc., a subsidiary of
Western-Southern Life Assurance Company ("Western-Southern"), and
Western-Southern, owned 36.6%, 64.6%, 28.5%, 51.1%, 22.2% and 30.7% of the
Emerging Growth Fund, the International Equity Fund, the Growth & Income Fund,
the Balanced Fund, the Income Opportunity Fund and the Bond Fund, respectively.
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:
a) Investment Valuation. Valuation of investments by each Portfolio is
discussed in Note 1 of the Portfolio Trust's Notes to Financial Statements which
are included elsewhere in this report.
b) Investment Income. Each Fund records its share of the corresponding
Portfolio's net investment income and realized and unrealized gains and losses
and adjusts its investment in the corresponding Portfolio each day. All the net
investment income and realized and unrealized gains and losses of each Portfolio
are allocated among the corresponding Fund and the other investors in the
Portfolio at the time of such determination.
c) Dividends and Distributions. Substantially all of the net investment
income of the Growth & Income Fund, the Income Opportunity Fund and the Bond
Fund is declared as dividends and paid monthly. Substantially all of the net
investment income of the Balanced Fund is declared as dividends and paid
quarterly. Substantially all of the net investment income of the Emerging Growth
Fund and the International Equity Fund is declared as dividends and paid
annually. Distributions to shareholders of net realized capital gains, if any,
are declared and paid annually. Dividends and distributions are recorded on
ex-dividend date and are reinvested at net asset value.
10
<PAGE> 13
SELECT ADVISORS TRUST A
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Income and realized capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassification, are primarily due to non- deductible organization costs,
passive foreign investment companies, foreign currency transactions, losses
deferred due to wash sales, and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital. Undistributed
net investment income and accumulated net realized gain or loss from the
Portfolios 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.
d) Organization Expense. Organization expenses were deferred and are
being amortized by each Fund on a straight-line basis over a five-year period
from commencement of operations. The amount paid by the Trust on any redemption
by Touchstone Advisors, Inc. or any other then-current holder of the
organizational seed capital shares ("Initial Shares") of the Fund will be
reduced by a portion of any unamortized organization expenses of the Fund and
the corresponding Portfolio, 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 then outstanding after taking into account any prior redemptions of the
Initial Shares of the Fund. The amount of such reduction in excess of the
unamortized organization expenses of the Fund, if any, shall be contributed by
the Fund to the corresponding Portfolio.
e) Federal Taxes. Each Fund of the Trust is treated as a separate entity
for federal income tax purposes. Each Fund's policy is to comply with the
provisions of the Internal Revenue Code of 1986, as amended, applicable to
regulated investment companies and to distribute substantially all of its
income, and net realized capital gains, if any, within the prescribed time
periods. Accordingly, no provision for federal income tax is necessary. There
were no capital loss carryforwards at December 31, 1997 for any of the Select
Advisor Trust A Funds.
At December 31, 1997, the following funds have net capital losses
attributable to security transactions incurred after October 31, 1997, which are
treated as arising on the first day of the Fund's next taxable year.
<TABLE>
<S> <C>
Bond Fund A $ 2,317
Balanced Fund A 3,353
Income Opportunity Fund A 240,465
International Equity Fund A 6,353
</TABLE>
f) 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.
2. TRANSACTIONS WITH AFFILIATES
a) Distribution and Service Plan. Under the Trust's Distribution and
Service Plan in accordance with Rule 12b-1 under the Act, the Trust retains
Touchstone Securities, Inc. ("Distributor"), a subsidiary of Western-Southern,
as a service agent of the Trust and as the principal underwriter of the shares
of each Fund. Each fund will pay a service fee to the Distributor equal to, on
an annual basis, up to 0.25% of that Fund's average daily net assets. The
Distributor may also use the distribution fees received from each Fund to
otherwise promote the sale of shares of the Funds to other than current
shareholders and for sales literature or other promotional activities.
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 December 31, 1998.
c) Trustees. Each Trustee who is not an "interested person" (as defined
by 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 Select Advisors Trust C, Select Advisors
Portfolios, and Select Advisors Variable Insurance Trust, which are included in
separate reports. For the year ended December 31, 1997, the Trust, not including
the Standby Income Fund which is included in a separate report, incurred $3,484
in Trustee fees which were prorated to each Fund in the Trust.
11
<PAGE> 14
SELECT ADVISORS TRUST A
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. EXPENSE REIMBURSEMENTS
The Sponsor has agreed to reimburse each Fund so that, following such
reimbursement, the aggregate total operating expenses (excluding interest,
taxes, brokerage commissions and extraordinary expenses) of each Fund including
the Fund's proportionate share of expenses of the corresponding Portfolio are
not greater, on an annual basis, than the percentage of average daily net assets
of the Fund listed below for the year ended December 31, 1997.
<TABLE>
<CAPTION>
INCOME
EMERGING INTERNATIONAL GROWTH & BALANCED OPPORTUNITY BOND
GROWTH FUND A EQUITY FUND A INCOME FUND A FUND A FUND A FUND A
------------- ------------- ------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Voluntary Expense
Limit 1.50% 1.60% 1.30% 1.35% 1.20% 0.90%
Amount of
Reimbursement $112,526 $111,956 $123,503 $115,776 $144,009 $102,880
- --------------------------------------------------------------------------------------------------------
</TABLE>
FEDERAL TAX INFORMATION (UNAUDITED)
For corporate shareholders, a portion of the ordinary dividends paid during
the Fund's year ended December 31, 1997, qualified for the dividends received
deduction, as follows:
<TABLE>
<CAPTION>
EMERGING GROWTH & BALANCED
GROWTH FUND A INCOME FUND A FUND A
------------- ------------- --------
<S> <C> <C>
12% 18% 4%
</TABLE>
Pursuant to Section 852 of the Internal Revenue Code, the fund designates
the following capital gain dividends for the year ended December 31, 1997.
<TABLE>
<CAPTION>
INCOME
EMERGING GROWTH & BALANCED OPPORTUNITY BOND INTERNATIONAL
GROWTH FUND A INCOME FUND A FUND A FUND A FUND A EQUITY FUND A
------------- ------------- -------- ----------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
28% Rate gains $ 33,588 $ 47,340 $ 33,987 $105,153 -- $102,731
20% Rate gains $146,827 $163,754 $186,496 $ 8,218 $203 $153,343
</TABLE>
Touchstone International Equity Fund paid foreign taxes of $7,134 or $0.02
per share, and the Fund recognized $72,385 or $0.17 per share of foreign source
income during the year ended December 31, 1997.
12
<PAGE> 15
SELECT ADVISORS TRUST A
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Investors and Trustees of
the Select Advisors Trust A:
We have audited the accompanying statements of assets and liabilities of
the Select Advisors Trust A (the "Trust") (consisting of Touchstone Emerging
Growth Fund A, Touchstone International Equity Fund A, Touchstone Growth and
Income Fund A, Touchstone Balanced Fund A, Touchstone Income Opportunity Fund A
and Touchstone Bond Fund A), including the schedules of investments, as of
December 31, 1997, the related statements of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended and financial highlights for each of the three years in the period
then ended and for the period from October 3, 1994 (commencement of operations)
to December 31, 1994. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Select Advisors Trust A as of December 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the three
years in the period then ended and for the period from October 3, 1994
(commencement of operations) to December 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 13, 1998
13
<PAGE> 16
(This Page Intentionally Left Blank)
14
<PAGE> 17
[LOGO TOUCHSTONE]
------------------------------
The Touchstone Family of Funds
-------------
Select Advisors Portfolios
- Emerging Growth Portfolio
- International Equity Portfolio
- Growth & Income Portfolio
- Balanced Portfolio
- Income Opportunity Portfolio
- Bond Portfolio
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<PAGE> 18
EMERGING GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- ------- ----------
<C> <S> <C>
COMMON STOCKS (91.7%)
ADVERTISING (0.2%)
1,500 Mastering*...................... $ 13,688
----------
AUTOMOTIVE (2.4%)
1,800 Bandag, Class A................. 86,175
3,800 Exide........................... 98,325
----------
184,500
----------
BANKING (5.3%)
2,000 Bank United, Class A............ 97,875
3,700 Dime Bancorp., Inc. ............ 111,925
5,100 Golden State Bancorp*........... 190,613
----------
400,413
----------
BEVERAGES, FOOD & TOBACCO (3.2%)
3,700 DiMon........................... 97,125
4,200 Ralcorp Holdings*............... 71,138
1,500 Robert Mondavi, Class A*........ 73,125
----------
241,388
----------
BUILDING MATERIALS (2.7%)
4,100 Calmat.......................... 114,288
2,400 Martin Marietta Materials....... 87,750
----------
202,038
----------
CHEMICALS (2.8%)
6,200 Calgon Carbon................... 66,650
2,500 Standard Products............... 64,063
5,100 Vivid Technologies*............. 80,963
----------
211,676
----------
COMMERCIAL SERVICES (9.5%)
3,000 Administaff*.................... 77,625
2,300 Advance Paradigm*............... 73,025
4,800 A.C. Nielson*................... 117,000
4,000 Boron Lepore & Associates*...... 110,000
4,900 Metromail*...................... 87,588
1,300 National Service Industries..... 64,431
2,000 Stewart Enterprises............. 93,250
2,600 Wallace Computer Services....... 101,075
----------
723,994
----------
COMMUNICATIONS (1.6%)
2,400 Cable Design Technologies*...... 93,300
2,000 Geotel Communications*.......... 31,250
----------
124,550
----------
COMPUTERS & INFORMATION (7.4%)
2,600 EMC*............................ 71,338
3,900 Gerber Scientific............... 77,513
9,900 Intergraph*..................... 99,000
3,800 Saville Systems, ADR*........... 157,700
6,700 Scitex*......................... 80,819
2,016 Sterling Commerce*.............. 77,490
----------
563,860
----------
COMPUTER SOFTWARE &
PROCESSING (8.7%)
2,200 Cambridge Technology
Partners*....................... 91,575
1,000 CBT Group*...................... 82,125
2,200 HNC Software*................... 94,600
2,500 Keane*.......................... 101,563
1,600 Policy Management System*....... 111,300
8,000 PSW Technologies*............... 116,000
1,600 Wind River Systems*............. 63,500
----------
660,663
----------
ELECTRONICS (3.8%)
1,200 Commscope*...................... $ 16,125
4,300 Magnetek*....................... 83,850
990 Sanmina*........................ 67,073
4,000 Sipex Corporation*.............. 121,000
----------
288,048
----------
ENTERTAINMENT & LEISURE (1.0%)
2,000 Cinar Films, Class B*........... 77,750
----------
FINANCIAL SERVICES (5.6%)
2,325 First Security.................. 97,359
4,300 Life USA Holdings*.............. 72,563
2,400 Meditrust....................... 87,900
1,200 Seacor Smit*.................... 72,300
6,000 T&W Financial*.................. 99,750
----------
429,872
----------
HEALTH CARE PROVIDERS (1.0%)
8,000 Dianon Systems*................. 75,000
----------
HEAVY INDUSTRY (2.5%)
4,200 Comfort Systems USA*............ 82,950
2,299 Flowserve....................... 64,228
2,700 Global Industrial
Technologies*................... 45,731
----------
192,909
----------
HOME CONSTRUCTION, FURNISHINGS &
APPLIANCE (2.2%)
1,600 Herman Miller................... 87,300
1,900 LA-Z-Boy Chair.................. 81,938
----------
169,238
----------
INDUSTRIAL (3.9%)
3,000 CN Biosciences*................. 75,000
3,000 General Cable................... 108,563
2,800 Wesley Jessen Visioncare*....... 109,200
----------
292,763
----------
INSURANCE (2.0%)
900 HSB Group....................... 49,669
2,700 Western National................ 79,988
1,900 Willis Coroon Group, ADR........ 23,394
----------
153,051
----------
MEDIA--BROADCASTING & PUBLISHING
(4.4%)
1,700 American Radio Systems*......... 90,622
1,100 Central Newspapers, Class A..... 81,331
7,100 Hollinger International......... 99,400
2,100 Lee Enterprises................. 62,081
----------
333,434
----------
MEDICAL (0.7%)
3,300 Atria Communities*.............. 56,513
----------
MEDICAL SUPPLIES (2.2%)
3,100 EG&G............................ 64,519
6,100 Elsag Bailey*................... 100,650
----------
165,169
----------
METALS (1.0%)
1,700 Harsco.......................... 73,313
----------
OIL & GAS (3.7%)
2,800 Equitable Resources............. 99,050
11,000 Grey Wolf*...................... 59,125
2,700 Nabors Industries*.............. 84,881
2,800 Quaker State.................... 39,900
----------
282,956
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 19
EMERGING GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- ------- ----------
<S> <C> <C>
COMMON STOCKS--CONTINUED
PHARMACEUTICALS (1.3%)
5,300 Digene*......................... $ 45,713
7,000 Sequus Pharmaceuticals*......... 52,063
----------
97,776
----------
REAL ESTATE (2.4%)
2,300 Arden Realty Group.............. 70,725
2,500 CCA Prison Realty Trust......... 111,563
----------
182,288
----------
RETAILERS (2.5%)
11,500 Charming Shoppes................ 53,906
2,600 Stanhome........................ 66,788
3,000 Zale*........................... 69,000
----------
189,694
----------
TEXTILES, CLOTHING & FABRICS
(1.8%)
2,200 Albany International............ 50,600
7,100 Stride Rite..................... 85,200
----------
135,800
----------
TRANSPORTATION (5.9%)
2,000 Alexander & Baldwin............. 54,625
6,800 Fritz Companies*................ 94,775
4,400 JB Hunt Transportation
Services........................ 82,500
3,800 Knightsbridge Tankers........... 107,588
4,300 Newport News Shipbuilding....... 109,381
----------
448,869
----------
TOTAL COMMON STOCKS (COST $5,405,843).....
$6,971,213
----------
TOTAL INVESTMENTS AT VALUE (91.7%) (COST
$5,405,843)(a)............................ 6,971,213
CASH AND OTHER ASSETS NET OF LIABILITIES
(8.3%).................................... 629,084
----------
NET ASSETS (100.0%)....................... $7,600,297
==========
</TABLE>
- -----------
NOTES TO THE SCHEDULE OF INVESTMENTS:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is $5,406,241,
resulting in gross unrealized appreciation and depreciation of $1,689,435
and $124,463, respectively and net unrealized appreciation of $1,564,972.
ADR - American Depositary Receipt
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- ---------- ----------
<S> <C> <C>
COMMON STOCKS (94.6%)
ARGENTINA (0.0%)
1 Compania Naviera Perez
Companc.................... $ 7
----------
AUSTRIA (0.6%)
950 Erste Banks.................. 47,344
----------
BRAZIL (1.1%)
1,900 Cia Paranaense Energy, ADR... 26,006
292,000 Saneamento Basico............ 69,334
----------
95,340
----------
CANADA (3.5%)
865 BCE.......................... 28,961
1,886 Canadian Imperial Bank of
Commerce................... 58,725
300 Newbridge Networks*.......... 10,548
200 Northern Telecom............. 17,829
2,350 Petro-Canada................. 43,164
1,320 Royal Bank of Canada......... 69,960
1,500 Suncor Energy................ 51,429
630 Talisman Energy.............. 18,735
----------
299,351
----------
CHILE (1.0%)
1,325 Chilectra ADR................ 33,844
1,620 Compania De
Telecomunicaciones ADR..... 48,398
----------
82,242
----------
DENMARK (0.8%)
181 Den Danske Bank.............. $ 24,127
3,160 Sas Danmark.................. 46,136
----------
70,263
----------
FINLAND (0.8%)
1,804 Pohjola Insurance, Class B... 66,899
----------
FRANCE (12.3%)
322 Accor........................ 59,888
1,023 Alcatel Alsthom.............. 130,075
1,226 AXA.......................... 94,897
1,022 Banque National De Paris..... 54,340
1,047 Cap Gemini................... 85,880
1,424 Credit Commercial De
France..................... 97,632
1,921 France Telecom............... 69,701
1,715 Lagardere Groupe............. 56,725
2,091 Renault*..................... 58,839
2,854 Rhone Poulenc Series A....... 127,888
731 Societe National
Elf-Aquitaine.............. 85,049
724 Suez Lyonnaise Des Eaux-
Dumex...................... 80,144
482 Total S.A., Series B......... 52,474
----------
1,053,532
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 20
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- ---------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
GERMANY (3.8%)
1,246 Bayerische Vereinsbank....... $ 81,565
204 Mannesmann................... 103,135
1,491 Rhein-Westfael
Elektricitaet.............. 80,023
667 Schering..................... 64,363
----------
329,086
----------
GREAT BRITAIN (28.2%)
1,000 Airtours..................... 20,375
3,900 Allied Irish Banks........... 37,213
7,203 Amvesco...................... 61,636
24,970 Avis Europe.................. 71,391
8,622 Boots........................ 124,176
4,120 British Aerospace............ 117,456
17,226 British Gas.................. 77,558
6,855 British Petroleum............ 90,730
8,400 Compass Group................ 103,380
8,430 CRH*......................... 97,793
1,725 GKN.......................... 35,345
4,312 Glaxo Wellcome............... 102,841
8,892 Great Universal Stores....... 112,066
6,995 JJB Sports................... 75,514
8,992 Lloyds TSB Group............. 117,028
3,441 Mercury Assets Management
Group...................... 96,133
5,683 National Westminster Bank.... 95,061
8,178 Next......................... 93,387
7,275 Railtrack Group.............. 115,594
14,572 Royal & Sun Alliance
Insurance Group............ 146,777
12,170 Sainsbury (J) Finance PLC.... 101,785
13,492 Shell Transport & Trading.... 94,663
1,760 Siebe........................ 34,562
10,061 Tesco........................ 81,832
9,124 Unilever..................... 78,514
2,200 Virgin Express Holdings,
ADR........................ 45,650
17,596 Vodafone Group............... 126,927
16,627 WPP Group.................... 73,219
----------
2,428,606
----------
IRELAND (1.2%)
6,500 Bank Of Ireland.............. 99,756
----------
ISRAEL (0.7%)
1,500 ECI Telecommunications....... 38,250
190 Geotek Communications........ 291
500 Teva Pharmaceutical
Industries, ADR............ 23,656
----------
62,197
----------
ITALY (6.2%)
4,010 Assicurazione Generali....... 98,733
38,235 Credito Italiano............. 118,338
91,868 Montedison................... 82,411
19,700 Stet RISP*................... 86,611
22,100 Telecom Italia Mobile........ 102,025
6,785 Telecom Italia............... 43,427
----------
531,545
----------
JAPAN (10.0%)
500 Acom......................... 27,570
1,000 Aoyama Trading............... 16,925
2,600 Bank of Tokyo................ 35,841
2,000 Bridgestone.................. 43,347
1,000 Canon........................ 23,282
4,000 Fujitsu...................... 42,887
1,000 Fuji Photo Film.............. $ 38,292
1,000 Honda Motor.................. 36,684
2 Japan Tobacco................ 14,183
2,000 Kao.......................... 28,796
600 Konami Company............... 14,750
3,000 Minebea...................... 32,165
2,000 Mitsubishi Estate............ 21,750
3,000 Mitsubishi Trust & Bank...... 30,098
300 Nintendo..................... 29,638
2,000 Nippon Comsys................ 24,660
8 Nippon Telegraph and
Telephone.................. 34,310
100 Nippon Television Network.... 29,332
1,000 Nomura Securities............ 13,326
460 Promise Company.............. 25,506
1,000 Sankyo....................... 22,592
2,000 Sekisui House................ 12,851
500 Sony......................... 44,419
1,000 TDK.......................... 75,359
2,000 Terumo....................... 29,408
1,600 Tokyo Electric Power......... 29,163
2,000 Toyota Motor................. 57,285
1,000 Yamanouchi Pharmaceutical.... 21,444
----------
855,863
----------
MEXICO (2.9%)
11,800 Cemex, Class B*.............. 62,725
11,315 Fomento Economico Mexicano,
Class B.................... 90,991
20,400 Kimberly-Clark Mexico, Series
A.......................... 96,559
----------
250,275
----------
NETHERLANDS (4.7%)
1,190 Ahrend....................... 37,406
1,010 Benckiser.................... 41,815
2,650 Ing Groep.................... 111,675
1,876 Koninklijke PTT Nederland NV... 78,317
872 Philips Electronics.......... 52,324
2,880 Verenigde Nederlandse........ 81,291
----------
402,828
----------
NORWAY (0.2%)
1,086 Sas Norge, Class B........... 15,151
----------
PORTUGAL (0.5%)
200 Portugal Telecom, ADR........ 9,400
800 Portugal Telecom............. 37,120
----------
46,520
----------
RUSSIA (0.8%)
300 AO Tatneft ADR............... 42,633
2,875 JSC Surgutneftegaz ADR....... 29,386
----------
72,019
----------
SPAIN (1.5%)
1,535 Banco Popular Espanola....... 107,304
853 Sol Melia.................... 34,154
----------
141,458
----------
SWEDEN (3.3%)
635 Electrolux................... 44,084
11,600 Nordbanken Holding*.......... 65,623
1,400 Skandia Forsaekrings......... 66,059
4,634 Forenings Sparbanken......... 105,387
----------
281,153
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 21
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- ---------- ----------
<S> <C> <C>
COMMON STOCKS--CONTINUED
SWITZERLAND (9.5%)
14 Julius Baer Holdings......... $ 25,945
29 Kuoni Reisen Holdings........ 108,575
61 Liechtenstein Global Trust... 37,751
118 Novartis..................... 191,966
131 Rentenenstalt................ 102,750
14 Roche Holding................ 69,433
59 Sairgroup*................... 80,692
302 Schweizerische Bankverein*... 93,759
36 Swiss Reinsurance............ 67,256
27 Union Bank of Switzerland.... 38,995
----------
817,122
----------
RUSSIA (0.5%)
1,300 Lukoil Holdings.............. 40,351
----------
VENEZUELA (0.5%)
1,000 Cia Anonima Nacional
Telefonos De Venezuela
ADR*....................... 41,625
----------
TOTAL COMMON STOCKS (COST $7,344,334).....
8,130,533
----------
PREFERRED STOCKS (2.6%)
BRAZIL (0.0%)
55,000 Cia Paranaense De Energia
PFB........................ 747
----------
GERMANY (2.6%)
1,875 Henkel....................... $ 118,361
314 Sap.......................... 102,775
----------
221,136
----------
TOTAL PREFERRED STOCKS (COST $187,288).... 221,883
----------
TOTAL INVESTMENTS AT VALUE (97.2%) (COST
$7,531,622)(a)............................ 8,352,416
CASH AND OTHER ASSETS NET OF LIABILITIES
(2.8%).................................... 241,047
----------
NET ASSETS (100.0%)....................... $8,593,463
==========
</TABLE>
- ------------------------------
NOTES TO THE SCHEDULE OF INVESTMENTS:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is $7,577,991,
resulting in gross unrealized appreciation and depreciation of $999,459 and
$225,034, respectively, and net unrealized appreciation of $774,425.
ADR - American Depositary Receipt
PFB - Preferred Shares -- Class B
RISP - Risparmio (Italian "Savings Shares")
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- --------- -----------
<C> <S> <C>
COMMON STOCKS (97.0%)
AEROSPACE & DEFENSE (3.0%)
4,700 Rockwell International........ $ 245,575
10,700 T R W......................... 571,113
-----------
816,688
-----------
AUTOMOTIVE (5.8%)
7,500 Dana.......................... 356,250
5,900 Echlin........................ 213,506
11,600 Ford Motor.................... 564,775
8,600 Meritor Automotive............ 181,138
5,100 Paccar........................ 267,750
-----------
1,583,419
-----------
BANKING (12.7%)
1,100 Centura Banks................. 75,900
4,800 Chase Manhattan............... 525,600
1,700 First American................ 84,575
7,900 First Commerce................ 531,275
1,100 First Tennessee National...... 73,425
7,200 Firstar....................... 305,550
8,600 Key........................... 608,988
9,100 Nationsbank................... 553,394
11,000 North Folk Bancorp............ 369,188
2,800 US Bancorp.................... 313,425
-----------
3,441,320
-----------
BEVERAGES, FOOD & TOBACCO
(7.6%)
3,800 General Mills................. $ 272,175
11,900 Heinz (H. J.)................. 604,669
13,600 Philip Morris Companies....... 616,250
9,600 Unilever, ADR................. 599,400
-----------
2,092,494
-----------
CHEMICALS (6.7%)
2,900 Akzo NV, ADR.................. 251,938
3,900 Betzdearborn.................. 238,144
2,200 Dow Chemical Company.......... 223,300
5,100 Eastman Chemical Company...... 303,769
8,500 Imperial Chemical
Industries, ADR............. 551,969
5,700 Olin.......................... 267,188
-----------
1,836,308
-----------
COMMERCIAL SERVICES (6.3%)
1,500 Browning-Ferris Industries.... 55,500
9,800 Cinergy....................... 375,463
7,000 CMS Energy.................... 308,438
9,400 Duke Energy................... 520,525
8,300 Pacificorp.................... 226,694
7,800 Unicom Corporation............ 239,850
-----------
1,726,470
-----------
COSMETICS & PERSONAL CARE
(0.9%)
4,200 Avon Products................. 257,775
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 22
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- --------- -----------
<S> <C>
COMMON STOCKS--CONTINUED
ELECTRIC UTILITIES (1.3%)
5,600 Entergy....................... $ 167,650
2,100 Southern...................... 54,338
4,700 Wisconsin Energy.............. 135,125
-----------
357,113
-----------
ELECTRONICS (1.4%)
4,700 AMP........................... 197,400
4,000 Thomas & Betts................ 189,000
-----------
386,400
-----------
FINANCIAL SERVICES (8.7%)
5,100 Corestates Financial.......... 408,319
2,500 Federal National Mortgage
Association................. 142,645
5,100 First Union................... 261,375
1,900 Fleet Financial Group......... 142,381
15,300 HomeCorp*..................... 447,525
1,100 J P Morgan.................... 124,163
5,300 Meditrust..................... 194,113
5,600 Nationwide Health
Properties.................... 142,800
5,600 Old Kent Financial............ 221,900
12,000 Security Capital Industrial
Trust......................... 298,500
-----------
2,383,721
-----------
FOREST PRODUCTS & PAPER (6.8%)
4,900 Boise Cascade................. 148,225
4,500 Georgia-Pacific (Timber
Group)*....................... 102,094
4,800 Georgia-Pacific............... 291,600
8,800 Kimberly-Clark................ 433,950
4,800 Louisiana Pacific............. 91,200
13,700 Mead.......................... 383,600
5,100 Westvaco...................... 160,331
5,100 Weyerhauser................... 250,219
-----------
1,861,219
-----------
HOME CONSTRUCTION, FURNISHINGS
& APPLIANCES (1.0%)
4,800 Whirlpool..................... 264,000
-----------
INSURANCE (2.6%)
2,200 Exel Limited.................. 139,425
5,100 Lincoln National.............. 398,438
3,300 Mid Ocean..................... 179,025
-----------
716,888
-----------
MEDICAL SUPPLIES (0.7%)
4,000 Baxter International.......... 201,750
-----------
METALS (2.3%)
9,600 Allegheny Teledyne............ 248,400
6,400 Freeport McMoran Copper &
Gold........................ 98,000
8,700 Oregon Steel Mills............ 185,419
1,700 Phelps Dodge.................. 105,825
-----------
637,644
-----------
OFFICE EQUIPMENT (2.3%)
8,600 Xerox......................... 634,788
-----------
OIL & GAS (7.4%)
6,300 Elf Aquitaine, ADR............ $ 369,338
4,100 MCN Energy Group.............. 165,538
8,000 Texaco........................ 435,000
4,500 Total S.A., ADR............... 249,750
16,000 Williams Companies............ 454,000
10,000 YPF Sociedad Anonima ADR...... 341,875
-----------
2,015,501
-----------
PHARMACEUTICALS (4.0%)
5,400 American Home Products........ 413,100
3,900 Merck......................... 414,375
2,600 Zeneca Group, ADR............. 280,800
-----------
1,108,275
-----------
RETAILERS (4.5%)
5,100 J.C. Penney Company........... 307,594
3,700 May Department Stores......... 194,944
4,300 Mercantile Stores............. 261,763
3,900 Rite Aid...................... 228,881
5,400 Sears Roebuck................. 244,350
-----------
1,237,532
-----------
TELEPHONE SYSTEMS (10.1%)
5,900 Alltel........................ 242,269
4,900 Bell Atlantic................. 445,900
5,500 Bellsouth..................... 309,719
8,300 Frontier...................... 199,719
10,300 GTE........................... 538,175
9,800 SBC Communications............ 717,850
5,100 Sprint........................ 298,988
-----------
2,752,620
-----------
TRANSPORTATION (0.9%)
4,400 CSX........................... 237,600
-----------
TOTAL COMMON STOCKS
(COST $24,433,029)........................ 26,549,525
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- --------
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS (COST
$249,000) (0.9%)
ENTERTAINMENT & LEISURE (0.9%)
$249,000 Loews, 3.125%, 09/15/07....... 246,510
-----------
TOTAL INVESTMENTS AT VALUE (97.9%)
(COST $24,682,029)(a)..................... 26,796,035
CASH AND OTHER ASSETS NET OF LIABILITIES
(2.1%).................................... 577,478
-----------
NET ASSETS (100.0%)....................... $27,373,513
===========
</TABLE>
- ------------------------------
NOTES TO THE SCHEDULE OF INVESTMENTS:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is
$24,682,029, resulting in gross unrealized appreciation and depreciation of
$2,943,104 and $829,098, respectively, and net unrealized appreciation of
$2,114,006.
ADR - American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 23
BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- --------- ----------
<S> <C> <C>
COMMON STOCKS (60.5%)
ADVERTISING (1.6%)
2,100 WPP Group...................... $ 94,763
----------
AEROSPACE & DEFENSE (3.3%)
1,800 Boeing......................... 88,088
1,100 Lockheed Martin................ 108,350
----------
196,438
----------
AIRLINES (2.0%)
900 AMR*........................... 115,650
----------
BANKING (3.4%)
800 Citicorp....................... 101,150
300 Wells Fargo.................... 101,831
----------
202,981
----------
BEVERAGES, FOOD & TOBACCO
(2.7%)
1,800 Diageo......................... 68,175
1,900 McDonald's..................... 90,725
----------
158,900
----------
CHEMICALS (2.5%)
3,600 Monsanto....................... 151,200
----------
COMPUTERS & INFORMATION (1.2%)
2,600 EMC*........................... 71,338
----------
ELECTRONICS (10.0%)
2,400 Adaptec*....................... 89,100
1,100 Avnet.......................... 72,600
6,967 Commscope*..................... 93,619
6,300 Nextlevel Systems*............. 112,613
2,000 Solectron*..................... 83,125
3,600 Ucar International*............ 143,775
----------
594,832
----------
ENTERTAINMENT & LEISURE (3.3%)
2,500 Polaroid....................... 121,719
1,200 Time Warner.................... 74,400
----------
196,119
----------
FINANCIAL SERVICES (11.5%)
3,700 Countrywide Credit............. 158,638
1,300 Federal National Mortgage
Association.................. 74,181
2,200 Renaissancere Holdings......... 97,075
5,300 Sabre Group Holding*........... 153,038
2,700 Security Capital Group, Class
B*............................. 87,750
4,400 Security Capital Industrial
Trust*......................... 109,450
----------
680,132
----------
HEALTH CARE PROVIDERS (1.8%)
3,300 Tenet Healthcare*.............. 109,313
----------
HEAVY INDUSTRY (3.5%)
1,400 Caterpillar.................... 67,988
4,000 Lucasvarity.................... 139,500
----------
207,488
----------
INDUSTRIAL (1.8%)
1,400 Armstrong World Industries..... 104,650
----------
LODGING (1.2%)
4,700 Homestead Village Property*.... $ 70,794
----------
METALS (1.2%)
2,700 Allegheny Teledyne............. 69,863
----------
OIL & GAS (2.4%)
2,300 Anadarko Petroleum............. 139,581
----------
REAL ESTATE (1.6%)
2,800 Oakwood Homes.................. 92,925
----------
TELEPHONE SYSTEMS (2.4%)
2,400 Sprint......................... 140,700
----------
TEXTILES, CLOTHING & FABRICS
(3.1%)
9,600 Shaw Industries................ 111,600
1,700 Unifi.......................... 69,169
----------
180,769
----------
TOTAL COMMON STOCKS (COST $3,201,058).....
3,578,436
----------
<CAPTION>
PRINCIPAL
AMOUNT
- --------
<S> <C> <C>
CORPORATE BONDS (14.7%)
BANKING (5.3%)
$ 50,000 Bankers Trust-NY, 7.125%,
03/15/06..................... 51,440
100,000 BB&T, 7.25%, 06/15/07.......... 105,210
100,000 Chase Manhattan, 7.25%,
06/01/07..................... 104,838
358,385 Nykredit, 6.00%, 10/01/26...... 51,005
----------
312,493
----------
BEVERAGES, FOOD & TOBACCO (1.1%)
60,000 Coca-Cola Femsa, 8.95%,
11/01/06..................... 62,583
----------
ELECTRIC UTILITIES (1.6%)
95,000 Financiera Energy, 9.375%,
06/15/06..................... 95,742
----------
FINANCIAL SERVICES (4.1%)
100,000 Bonos Del Tesoro, 8.75%,
05/09/02..................... 94,562
40,000 G.E. Capital Management
Service, 6.50%, 11/25/23..... 36,903
44,500 G.E. Capital Management
Service, 6.50%, 03/25/24..... 43,065
69,000 Paine Webber Group, 7.00%,
03/01/00..................... 69,927
----------
244,457
----------
METALS (1.7%)
100,000 AK Steel, 9.125%, 12/15/06..... 102,500
----------
OIL & GAS (0.9%)
50,000 Petroleos Mexicanos, 8.85%,
09/15/07..................... 49,500
----------
TOTAL CORPORATE BONDS
(COST $861,497)............................ 867,275
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 24
BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- --------- ----------
<S> <C> <C>
MORTGAGE BACKED SECURITIES (3.2%)
$ 20,000 Federal Home Loan Mortgage
Corporation, 6.00%,
03/15/08..................... $ 19,927
9,359 Federal National Mortgage
Association, 5.00%,
10/25/03..................... 9,317
45,000 Federal National Mortgage
Association, 6.15%,
10/25/07..................... 44,979
3,066 Merrill Lynch Mortgage
Investment, 9.70%,
07/15/10..................... 3,122
23,825 Merrill Lynch Mortgage
Investment, 7.65%,
01/15/12..................... 24,370
40,000 Merrill Lynch Mortgage
Investment, 7.09%,
12/26/25..................... 40,800
50,000 Prudential Home Mortgage
Securities, 6.25%,
04/25/24..................... 45,950
----------
TOTAL MORTGAGE BACKED SECURITIES
(COST $184,190)............................ 188,465
----------
MUNICIPAL BONDS (4.3%)
40,000 Baltimore Community Development
Financing, 8.20%, 08/15/07... 44,000
7,957 Denver Colorado City & County
Single Family, 7.25%,
12/01/10..................... 8,216
20,000 Michigan State Job Development
Authority, 7.10%, 05/01/98... 20,076
15,000 New York City, New York,
General Obligation, 9.75%,
08/05/12..................... 16,238
40,000 New York State Housing Finance
Agency Service, 7.50%,
09/15/03..................... 41,050
50,000 Ohio Housing Financial Agency,
7.90%, 10/01/14.............. 53,188
30,000 Oklahoma City Airport, 9.40%,
11/01/10..................... 33,713
40,000 Oregon State General
Obligation, 6.90%,
01/01/00..................... 40,267
----------
TOTAL MUNICIPAL BONDS
(COST $244,860)............................ 256,748
----------
U.S. TREASURY OBLIGATIONS (13.0%)
$ 95,000 US Treasury Bond, 6.75%,
08/15/26..................... $ 104,618
65,000 US Treasury Note, 6.125%,
08/31/98..................... 65,223
100,000 US Treasury Note, 5.75%,
10/31/00..................... 100,093
50,000 US Treasury Note, 7.00%,
07/15/06..................... 53,984
100,000 US Treasury Bond, 6.25%,
04/30/01..................... 101,563
320,000 US Treasury Note, 7.25%,
08/15/04..................... 345,875
----------
TOTAL U.S. TREASURY OBLIGATIONS
(COST $748,297)............................ 771,356
----------
SOVEREIGN GOVERNMENT OBLIGATIONS (2.9%)
AUSTRALIA (1.7%)
143,000 Treasury Corp of Victoria,
7.50%, 08/15/08................ 99,865
----------
GREAT BRITAIN (1.2%)
37,000 UK Treasury, 8.00%, 12/07/15... 72,047
----------
TOTAL SOVEREIGN GOVERNMENT OBLIGATIONS
(COST $178,474)............................ 171,912
----------
<CAPTION>
UNITS
- --------
<C> <S> <C>
WARRANTS (0.0%)
FINANCIAL SERVICES (0.0%)
361 Security Capital Group......... 1,895
----------
TOTAL INVESTMENTS AT VALUE (98.6%)
(COST $5,418,376)(a)....................... 5,836,087
CASH AND OTHER ASSETS NET OF LIABILITIES
(1.4%)..................................... 83,614
----------
NET ASSETS (100.0%)........................ $5,919,701
==========
</TABLE>
- ------------------------------
NOTES TO THE SCHEDULE OF INVESTMENTS:
* Non-income producing security.
(a) The aggregate identified cost for federal income tax purposes is $5,418,397,
resulting in gross unrealized appreciation and depreciation of $493,644 and
$75,954, respectively, and net unrealized appreciation of $417,690.
- --------------------------------------------------------------------------------
INCOME OPPORTUNITY PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<C> <S> <C>
CORPORATE BONDS (34.8%)
BEVERAGES, FOOD & TOBACCO
(2.8%)
$ 300,000 Specialty Foods, 11.125%,
10/01/02.................. $ 303,750
-----------
CASINOS (1.8%)
200,000 Trump Atlantic City, 11.25%,
05/01/06.................. 195,000
-----------
CHEMICALS (7.2%)
$ 200,000 Climachem, 10.75%,
12/01/07.................. $ 206,000
300,000 Panoceanic Bulk, 12.00%,
12/15/07.................. 295,500
250,000 Perry-Judd, 10.625%,
12/15/07.................. 260,000
-----------
761,500
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE> 25
INCOME OPPORTUNITY PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<S> <C> <C>
CORPORATE BONDS--CONTINUED
COMPUTER SOFTWARE &
PROCESSING (1.9%)
$ 200,000 Details, 10.00%, 11/15/05... $ 204,500
-----------
ELECTRONICS (1.9%)
200,000 High Voltage Engineering,
10.50%, 08/15/04.......... 207,500
-----------
ENTERTAINMENT & LEISURE
(2.2%)
250,000 Pen-Tab Industries, 10.875%,
02/01/07.................. 240,000
-----------
FOREST PRODUCTS & PAPER
(2.4%)
250,000 Riverwood International,
10.625%, 08/01/07......... 253,750
-----------
HEAVY INDUSTRY (2.3%)
250,000 United Auto Group, 11.00%,
07/15/07.................. 246,250
-----------
INDUSTRIAL (3.8%)
200,000 Iowa Select Farms, 10.75%,
12/01/05.................. 205,250
200,000 Werner Holdings, 10.00%,
11/15/07.................. 205,000
-----------
410,250
-----------
OIL & GAS (2.4%)
250,000 Panaco, 10,625%, 10/01/04... 252,500
-----------
TELEPHONE SYSTEMS (6.1%)
200,000 Hyperion Telecom, 12.25%,
09/01/04.................. 221,000
200,000 Iridium LLC/Capital, 14.00%,
07/15/05.................. 217,000
200,000 Primus Telecommunications,
11.75%, 08/01/04.......... 215,000
-----------
653,000
-----------
TOTAL CORPORATE BONDS (COST
$3,653,486).............................. 3,728,000
-----------
EUROBONDS (23.3%)
BRAZIL (3.4%)
400,000 Paging Network De Brazil,
13.50%, 06/06/05.......... 364,000
-----------
ECUADOR (4.3%)
100,000 Conecel Holdings, 14.00%,
10/01/00.................. 100,000
350,000 Conecel, 14.00%, 05/01/02... 353,500
-----------
453,500
-----------
GREAT BRITAIN (1.9%)
200,000 Dialog, 11.00%, 11/15/07.... 207,500
-----------
HONG KONG (4.1%)
500,000 GS Superhighway Holdings,
10.25%, 08/15/07.......... 435,000
-----------
INDIA (2.5%)
500,000 Nippon Denro Ispat, 3.00%,
04/01/01.................. 270,000
-----------
NETHERLANDS (5.9%)
$ 500,000 DGS International Finance,
10.00%, 06/01/07.......... $ 425,000
250,000 Indah Kiat Fin Mauritius,
10.00%, 07/01/07.......... 210,000
-----------
635,000
-----------
THAILAND (1.2%)
1,250,000 NTS Steel Group Public,
4.00%, 12/16/08........... 125,000
-----------
TOTAL EUROBONDS (COST $3,052,308)........ 2,490,000
-----------
SOVEREIGN GOVERNMENT OBLIGATIONS (5.6%)
RUSSIA (1.4%)
250,000 Russia-Principal Loan (b),
6.719%, 12/15/20.......... 154,700
-----------
VENEZUELA (4.2%)
500,500 Republic of Venezuela,
9.25%, 09/15/27........... 449,449
-----------
TOTAL SOVEREIGN GOVERNMENT OBLIGATIONS
(COST $609,363).......................... 604,149
-----------
YANKEE BONDS (20.2%)
BRAZIL (6.5%)
350,000 Tevecap, 12.63%, 11/26/04... 321,125
400,000 TV Filme, 12.88%,
12/15/04.................. 373,952
-----------
695,077
-----------
INDONESIA (3.5%)
500,000 FSW International, 12.50%,
11/01/06.................. 380,000
-----------
MEXICO (10.2%)
850,000 Grupo Televisa (Zero Coupon
until 05/15/01, 13.25%
thereafter), 05/15/08
(c)....................... 636,479
200,000 Innova S. de R.L., 12.88%,
04/01/07.................. 202,000
250,000 Transport Maritma, 10.00%,
11/15/06.................. 250,313
-----------
1,088,792
-----------
TOTAL YANKEE BONDS (COST $2,298,205)..... 2,163,869
-----------
BRADY BONDS (12.2%)
BULGARIA (5.3%)
350,000 Government of Bulgaria, IAB
(d), 6.69%, 07/28/11...... 256,375
400,000 Government of Bulgaria (d),
6.69%, 07/28/24........... 308,000
-----------
564,375
-----------
ECUADOR (5.2%)
750,000 Republic of Ecuador (d),
3.50%, 02/28/25........... 409,650
188,000 Republic of Ecuador (d),
6.69%, 02/28/25........... 141,714
-----------
551,364
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE> 26
INCOME OPPORTUNITY PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<S> <C> <C>
BRADY BONDS--CONTINUED
PERU (1.7%)
$ 300,000 Government of Peru, FLIRB,
3.25%, 03/07/17........... $ 178,140
-----------
TOTAL BRADY BONDS(COST $1,130,066)....... 1,293,879
-----------
<CAPTION>
UNITS
- ----------
<C> <S> <C>
WARRANTS (0.0%)
TELEPHONE SYSTEMS (0.0%)
200 Primus Telecommunications... 2,000
-----------
TOTAL INVESTMENTS AT VALUE (96.1%)
(COST $10,743,428)(a).................... 10,281,897
CASH AND OTHER ASSETS NET OF LIABILITIES
(3.9%)................................... 415,517
-----------
NET ASSETS (100.0%)...................... $10,697,414
===========
</TABLE>
- ------------------------------
NOTES TO THE SCHEDULE OF INVESTMENTS:
(a) The aggregate identified cost for federal income tax purposes is
$10,743,428, resulting in gross unrealized appreciation and depreciation of
$339,291 and $800,822, respectively, and net unrealized depreciation of
$(461,531).
(b) A percentage of income is received as additional shares of securities.
(c) Zero or step coupon bond.
(d) Interest rate shown reflects current rate on instrument with variable or
floating rates
ADR - American Depositary Receipt
FLIRB - Front-Load Interest Reduction Bonds
IAB - Interest Arrears Bond
- --------------------------------------------------------------------------------
BOND PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<S> <C> <C>
ASSET BACKED SECURITIES (11.6%)
$ 500,000 World Omni Auto Lease,
6.18%, 11/25/03........... $ 500,115
196,111 Chase Manhattan Grantor
Trust, 5.20%, 02/15/02.... 194,652
750,000 Chemical Credit Card Master
Trust, 5.98%, 09/15/08.... 738,735
332,679 Navistar Financial, 6.35%,
11/15/02.................. 333,757
-----------
TOTAL ASSET BACKED SECURITIES (COST
$1,724,961).............................. 1,767,259
-----------
CORPORATE BONDS (34.7%)
BANKING (8.6%)
400,000 Associates Corporation of
North America, 7.88%,
09/30/01.................. 421,692
500,000 Bank of New York, 8.50%,
12/15/04.................. 557,869
225,000 Credit Suisse-London, 7.90%,
05/01/07.................. 237,398
85,875 Mercantile Safe Deposit+,
12.12%, 01/02/01.......... 90,960
-----------
1,307,919
-----------
BEVERAGES, FOOD & TOBACCO
(3.4%)
500,000 Rykoff Sexton, 8.875%,
11/01/03.................. 516,250
-----------
COMMERCIAL SERVICES (4.9%)
500,000 MCN Financing, 6.30%,
06/01/37.................. 500,000
250,000 Mississippi Power & Light,
8.80%, 04/01/05........... 251,078
-----------
751,078
-----------
COMMUNICATIONS (3.4%)
$ 500,000 Harris Corporation, 6.65%,
08/01/06.................. $ 511,561
-----------
ELECTRIC UTILITIES (1.6%)
250,000 AES, 8.50%, 11/01/07........ 250,000
-----------
FINANCIAL SERVICES (2.3%)
350,000 First Union, 6.55%,
10/15/35.................. 352,706
-----------
FOREST PRODUCTS & PAPER
(3.5%)
250,000 Georgia Pacific, 9.50%,
05/15/22*................. 284,201
250,000 Sweetheart Cup, 9.63%,
09/01/00.................. 246,250
-----------
530,451
INSURANCE (1.7%)
250,000 Travelers Capital, 7.75%,
12/01/36.................. 259,128
-----------
MEDIA--BROADCASTING &
PUBLISHING (5.3%)
250,000 News America Holdings,
10.13%, 10/15/12.......... 295,675
500,000 Viacom, 7.75%, 06/01/05..... 510,091
-----------
805,766
-----------
TOTAL CORPORATE BONDS (COST
$5,089,592).............................. 5,284,859
-----------
CONVERTIBLE CORPORATE BONDS
(COST $427,109) (2.9%)
MEDIA--BROADCASTING &
PUBLISHING (2.9%)
500,000 Scholastic, 5.00%,
08/15/05.................. 438,125
-----------
MORTGAGE BACKED SECURITIES (18.7%)
586,463 Federal Home Loan Mortgage
Association, 6.00%,
08/01/10.................. 577,800
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 27
BOND PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<C> <S> <C>
MORTGAGE BACKED SECURITIES--CONTINUED
$ 50,200 Federal Home Loan Mortgage
Association, 6.00%,
10/01/10.................. $ 49,459
173,068 Federal Home Loan Mortgage
Association, 6.00%,
05/01/09.................. 171,125
125,000 Government National Mortgage
Association, 7.50%,
12/15/27.................. 128,008
423,529 Government National Mortgage
Association, 9.00%,
08/15/19.................. 461,345
398,937 Government National Mortgage
Association, 6.50%,
01/15/24.................. 395,673
493,189 Government National Mortgage
Association, 7.00%,
06/15/09.................. 502,875
63,268 Government National Mortgage
Association, 10.25%,
07/15/12.................. 63,268
500,000 Advanta Mortgage Loan Trust,
6.03%, 08/25/11........... 497,350
-----------
TOTAL MORTGAGE BACKED SECURITIES (COST
$2,774,651).............................. 2,846,903
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS
(11.9%)
$ 750,000 US Treasury Note, 6.125%,
08/15/07.................. $ 770,859
250,000 US Treasury Note, 6.50%,
05/31/02.................. 257,344
750,000 US Treasury Note, 6.375%,
08/15/27.................. 790,781
-----------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (COST $1,802,285)............ 1,818,984
-----------
YANKEE BONDS (6.8%)
CANADA (4.2%)
600,000 Province of Quebec, 7.50%,
07/15/23.................. 646,944
-----------
KOREA (2.6%)
500,000 Pohang Iron & Steel, 7.50%,
08/01/02.................. 397,006
-----------
TOTAL YANKEE BONDS (COST $1,096,134)..... 1,043,950
-----------
AGENCY FOR INTERNATIONAL DEVELOPMENT
BONDS (5.0%)+
CENTRAL AMERICA (3.2%)
$ 140,000 Central America
International Development,
Series F, 10.00%,
12/01/11.................. $ 164,068
140,000 Central America
International Development,
Series G, 10.00%,
12/01/11.................. 164,068
140,000 Central America
International Development,
Series H, 10.00%,
12/01/11.................. 164,068
-----------
492,204
-----------
HONDURAS (1.8%)
100,000 Republic of Honduras
International Development,
Series, 13.00%,
06/01/11.................. 145,729
100,000 Republic of Honduras
International Development,
Series, 13.00%,
06/01/06.................. 130,265
-----------
275,994
-----------
TOTAL AGENCY FOR INTERNATIONAL
DEVELOPMENT BONDS (COST $620,000)........ 768,198
-----------
PREFERRED STOCKS (6.3%)
INDUSTRIAL (2.9%)
9,600 Appalachian Power........... 247,200
7,500 Ohio Power.................. 192,188
-----------
439,388
-----------
OIL & GAS (3.4%)
20,000 Transcanada Pipelines....... 527,500
-----------
TOTAL PREFERRED STOCKS
(COST $953,164).......................... 966,888
-----------
TOTAL INVESTMENTS AT VALUE (97.9%) (COST
$14,487,896)(a).......................... 14,935,166
CASH AND OTHER ASSETS NET OF LIABILITIES
(2.1%)................................... 327,429
-----------
NET ASSETS (100.0%)...................... $15,262,595
===========
</TABLE>
- ------------------------------
NOTES TO THE SCHEDULE OF INVESTMENTS:
+ Restricted and Board valued security (Note 5).
(a) The aggregate identified cost for federal income tax purposes is
$14,487,896, resulting in gross unrealized appreciation and depreciation of
$571,804 and $124,534, respectively, and net unrealized
appreciation of $447,270.
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 28
(This Page Intentionally Left Blank)
26
<PAGE> 29
SELECT ADVISORS PORTFOLIOS
Statements of Assets and Liabilities
December 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
EMERGING INTERNATIONAL GROWTH & INCOME
GROWTH EQUITY INCOME BALANCED OPPORTUNITY BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (Note 1)(a) $6,971,213 $8,352,416 $26,796,035 $5,836,087 $10,281,897 $14,935,166
Cash and foreign currency 570,113 243,408 342,487 -- 252,952 124,517
Receivables for:
Securities sold 107,082 29,994 413,371 5,105 -- --
Dividends 6,972 7,720 57,126 2,036 -- 16,978
Foreign tax reclaims 34 9,832 27 89 -- 1,094
Net unrealized gain on forward foreign
currency contracts -- 190 -- 5,637 -- --
Interest 2,281 1,298 3,957 35,962 322,131 191,183
Receivable from Investment Advisor (Note
4) 35,635 130,289 -- 43,898 -- 13,998
Deferred organization expenses (Note 1) 12,382 12,382 12,382 12,382 12,382 12,382
---------- ---------- ----------- ---------- ----------- -----------
Total assets 7,705,712 8,787,529 27,625,385 5,941,196 10,869,362 15,295,318
---------- ---------- ----------- ---------- ----------- -----------
LIABILITIES:
Payable for investments purchased 77,219 143,002 73,789 -- 141,946 --
Payable to Investment Advisor (Note 2) -- -- 142,613 -- 3,742 --
Due to Custodian -- -- -- 1,479 -- --
Other accrued expenses 28,196 51,064 35,470 20,016 26,260 32,723
---------- ---------- ----------- ---------- ----------- -----------
Total liabilities 105,415 194,066 251,872 21,495 171,948 32,723
---------- ---------- ----------- ---------- ----------- -----------
NET ASSETS:
Applicable to investors' beneficial
interests $7,600,297 $8,593,463 $27,373,513 $5,919,701 $10,697,414 $15,262,595
========== ========== =========== ========== =========== ===========
(a)Cost of investments $5,405,843 $7,531,622 $24,682,029 $5,418,376 $10,743,428 $14,487,896
========== ========== =========== ========== =========== ===========
<CAPTION>
Statements of Operations
For the year ended December 31, 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME (Note 1):
Interest $ 18,125 $ 16,635 $ 42,782 $ 140,386 $1,287,743 $ 1,041,039
Dividends 55,807 122,548(a) 425,029 35,733 -- 45,218
---------- ---------- ----------- ---------- ----------- -----------
Total investment income 73,932 139,183 467,811 176,119 1,287,743 1,086,257
---------- ---------- ----------- ---------- ----------- -----------
EXPENSES:
Administration, custody and fund
accounting 100,241 222,430 111,938 97,151 95,319 104,717
Investment advisory (Note 2) 48,463 73,217 181,803 38,823 66,313 82,976
Audit 17,354 18,737 16,279 11,585 18,587 5,839
Amortization of organization expenses
(Note 1) 7,052 7,052 7,052 7,052 7,052 7,052
Trustee fees (Note 2) 836 1,126 2,782 717 1,459 2,229
Legal 2,147 3,220 7,830 1,680 3,468 5,410
Miscellaneous 1,988 2,986 8,236 1,288 3,172 16,985
---------- ---------- ----------- ---------- ----------- -----------
Total expenses 178,081 328,768 335,920 158,296 195,370 225,208
Reimbursement from Investment
Advisor (Note 4) (84,098) (200,506) (39,190) (82,721) (62,571) (96,974)
---------- ---------- ----------- ---------- ----------- -----------
NET EXPENSES 93,983 128,262 296,730 75,575 132,799 128,234
---------- ---------- ----------- ---------- ----------- -----------
NET INVESTMENT INCOME (LOSS) (20,051) 10,921 171,081 100,544 1,154,944 958,023
---------- ---------- ----------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments 913,915 1,010,270(b) 4,825,120 965,160 410,064 81,483
Net change in unrealized appreciation
(depreciation) on investments 846,170 77,380(c) (380,944) (175,493) (742,747) 96,828
---------- ---------- ----------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS): 1,760,085 1,087,650 4,444,176 789,667 (332,683) 178,311
---------- ---------- ----------- ---------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,740,034 $1,098,571 $ 4,615,257 $ 890,211 $ 822,261 $ 1,136,334
========== ========== =========== ========== =========== ===========
</TABLE>
- ------------------------------
(a) Net of foreign tax withholding of $13,986.
(b) Includes foreign currency transactions loss of $46,938.
(c) Includes change in unrealized appreciation on foreign currency transactions
and other assets of $684.
The accompanying notes are an integral part of the financial statements.
27
<PAGE> 30
SELECT ADVISORS PORTFOLIOS
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
------------------------ ------------------------
1997 1996 1997 1996
FOR THE YEARS ENDED DECEMBER 31, ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) (20,051) (10,291) 10,921 20,197
Net realized gain (loss) on investments 913,915 281,561 1,010,270 134,444
Net change in unrealized appreciation (depreciation) on
investments 846,170 222,880 77,380 476,242
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations 1,740,034 494,150 1,098,571 630,883
---------- ---------- ---------- ----------
TRANSACTIONS IN INVESTORS' BENEFICIAL INTEREST:
Contributions 2,100,799 1,861,907 1,464,035 1,107,986
Withdrawals (843,327) (1,631,580) (540,590) (275,007)
---------- ---------- ---------- ----------
Net increase from investors' transactions: 1,257,472 230,327 923,445 832,979
---------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 2,997,506 724,477 2,022,016 1,463,862
NET ASSETS:
Beginning of period 4,602,791 3,878,314 6,571,447 5,107,585
---------- ---------- ---------- ----------
End of period $7,600,297 $4,602,791 $8,593,463 $6,571,447
========== ========== ========== ==========
<CAPTION>
Ratios and Supplementary Data
- ------------------------------------------------------------------------------------------------------------------
EMERGING GROWTH INTERNATIONAL EQUITY
PORTFOLIO PORTFOLIO
------------------------------------- ------------------------------------
1997 1996 1995 1994(a) 1997 1996 1995 1994(a)
FOR THE YEARS ENDED DECEMBER 31, ------- ------- ----- ------- ------- ------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ratios to average net assets:
Net expenses 1.55% 1.61% 1.59% 2.56%(b) 1.66% 1.67% 1.65% 3.20%(b)
Net investment income (loss) (0.33%) (0.23%) (0.12%) 5.51%(b) 0.14% 0.35% 0.09% (1.68%)(b)
Ratios of expenses to average net
assets without waiver and
reimbursement 2.94% 2.94% 3.59% 7.35%(b) 4.26% 3.12% 3.87% 4.62%(b)
Portfolio turnover 101% 117% 109% 150% 151% 86% 90% 7%
Average commission rate(c) $0.0570 $0.0553 -- -- $0.0299 $0.0259 -- --
</TABLE>
- ------------------------------
(a) The Portfolios commenced operations on October 3, 1994.
(b) Ratios are annualized.
(c) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades on
which commissions are charged. This amount may vary between periods and
funds depending on the volume and character of trades executed in various
markets where trading practices and commission rate structures may differ.
The accompanying notes are an integral part of the financial statements.
28
<PAGE> 31
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
GROWTH & INCOME BALANCED INCOME OPPORTUNITY BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------- ----------------------- ------------------------ -------------------------
1997 1996 1997 1996 1997 1996 1997 1996
----------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
<C> <C> <C> <C> <C> <C> <C> <C>
171,081 161,590 100,544 70,858 1,154,944 497,340 958,023 797,564
4,825,120 3,329,104 965,160 145,710 410,064 384,732 81,483 (14,517)
(380,944) (599,755) (175,493) 341,232 (742,747) 175,750 96,828 (399,872)
----------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
4,615,257 2,890,939 890,211 557,800 822,261 1,057,822 1,136,334 383,175
----------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
3,534,026 2,962,725 1,791,228 998,640 9,286,451 4,501,206 2,725,843 867,436
(1,731,931) (473,261) (791,530) (411,455) (6,560,662) (991,120) (2,127,372) (349,615)
----------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
1,802,095 2,489,464 999,698 587,185 2,725,789 3,510,086 598,471 517,821
----------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
6,417,352 5,380,403 1,889,909 1,144,985 3,548,050 4,567,908 1,734,805 900,996
20,956,161 15,575,758 4,029,792 2,884,807 7,149,364 2,581,456 13,527,790 12,626,794
----------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
$27,373,513 $20,956,161 $5,919,701 $4,029,792 $10,697,414 $7,149,364 $15,262,595 $13,527,790
=========== =========== ========== ========== =========== ========== =========== ===========
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GROWTH & INCOME BALANCED INCOME OPPORTUNITY BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------ ----------------------------------- ---------------------------------- -------------
1997 1996 1995 1994(a) 1997 1996 1995 1994(a) 1997 1996 1995 1994(a) 1997 1996
- -------- ------- ----- ------- ------- ------- ----- ------- ------ ------ ------ ------- ----- -----
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.25% 1.00% 1.23% 1.20%(b) 1.50% 1.51% 1.51% 1.33%(b) 1.30% 1.31% 1.42% 2.20%(b) 0.85% 0.85%
0.72% 0.87% 0.91% 1.11%(b) 1.99% 2.06% 2.29% 3.13%(b) 11.32% 11.31% 12.53% 8.09%(b) 6.35% 6.18%
1.49% 1.34% 1.53% 1.95%(b) 3.14% 3.38% 4.39% 6.48%(b) 1.92% 2.74% 4.77% 7.48%(b) 1.49% 1.32%
170% 92% 102% 10% 120% 88% 121% 7% 270% 222% 120% 144% 88% 64%
$0.0554 $0.0571 -- -- $0.0575 $0.0683 -- -- -- -- -- -- -- --
<CAPTION>
BOND
PORTFOLIO
- ---------------
1995 1994(a)
- ----- -------
<C> <C>
1.02% 1.21%(b)
6.66% 6.32%(b)
1.40% 1.76%(b)
78% 11%
-- --
</TABLE>
The accompanying notes are an integral part of the financial statements.
29
<PAGE> 32
SELECT ADVISORS PORTFOLIOS
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:
Select Advisors Portfolios (the "Portfolio Trust") was organized as a New
York master trust fund on February 7, 1994 and is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Portfolio Trust consists of eight subtrusts
(each a "Portfolio"), each having distinct investment objectives and policies:
Emerging Growth Portfolio, International Equity Portfolio, Growth & Income
Portfolio, Balanced Portfolio, Income Opportunity Portfolio, Bond Portfolio,
Bond Portfolio II and Growth & Income II. Bond Portfolio II and Growth & Income
II are included in a separate report.
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
Portfolios:
a) 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 Portfolio Trust. Such procedures
include the use of independent pricing services, which use prices based upon
yields or prices of securities of comparable quality, coupon, maturity and type;
indications as to values from dealers; and general market conditions. All
portfolio securities with a remaining maturity of less than 60 days are valued
at amortized cost, which approximates market.
b) Foreign Currency Translation. The accounting records of the Portfolios
are maintained in U.S. dollars. The market value of investment securities, other
assets and liabilities and forward contracts denominated in foreign currencies
are translated into U.S. dollars at the prevailing exchange rates at the end of
the period. Purchases and sales of securities, income receipts, and expense
payments are translated at the exchange rate prevailing on the respective dates
of such transactions. Reported net realized gains and losses on foreign currency
transactions represent net gains and losses from sales and maturities of forward
currency contracts, disposition of foreign currencies, currency gains and losses
realized between the trade and settlement dates on securities transactions and
the difference between the amount of net investment income accrued and the U.S.
dollar amount actually received.
The effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statement of Operations from the effects of
changes in market prices of these securities, but are included with net realized
and unrealized gain or loss on investments.
c) 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 Portfolio 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.
d) Federal Taxes. Each Portfolio is treated as a partnership for federal
income tax purposes. As such, each investor in each Portfolio is subject to
taxation on its share of that Portfolio's ordinary income and capital gains.
Therefore, no provision has been made for federal income taxes. It is intended
that each Portfolio's assets will be managed in such a way that an investor in
the Portfolio will be able to satisfy the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended.
e) Forward Currency Contracts. Each Portfolio may enter into forward
foreign currency contracts to protect securities and related receivables and
payables against fluctuations in foreign currency rates. A forward contract is
an agreement to buy or sell currencies of different countries on a specified
future date at a specified rate.
30
<PAGE> 33
SELECT ADVISORS PORTFOLIOS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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 Portfolio Trust and the change in the market value is recorded by the
Portfolio as unrealized appreciation or depreciation of forward foreign currency
contracts. As of December 31, 1997, the following Funds had the following open
foreign currency contracts:
<TABLE>
<CAPTION>
CONTRACTS TO UNREALIZED
FUND NAME MATURITY DATE DELIVER/RECEIVE IN EXCHANGE FOR VALUE GAIN/LOSS
--------- ------------- --------------- --------------- ------- ----------
<S> <C> <C> <C> <C> <C>
International Equity Portfolio
Sales 1/06/98 GBP 271 $ 451 $ 446 $ 5
1/02/98 SEK 66,203 8,526 8,341 185
------
$ 190
======
Balanced Portfolio
Sales 3/03/98 AUD 152,000 102,980 98,770 $4,210
1/09/98 DKK 319,000 47,742 46,596 1,146
3/19/98 GBP 43,000 70,666 70,385 281
------
$5,637
======
</TABLE>
AUD = Australian Dollar, DKK = Danish Krone, GBP = Great British Pound,
SEK = Swedish Krone
f) Repurchase Agreements. Each Portfolio may invest in repurchase
agreements, which are agreements pursuant to which securities are acquired by
the Portfolio 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
Portfolio may enter into repurchase agreements with banks or lenders meeting the
creditworthiness standards established by the Portfolio Trust Board of Trustees.
The Portfolio, 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 Portfolio has the right to use the collateral to offset losses incurred.
g) Organization Expense. Organization expenses were deferred and are
being amortized by each Portfolio on a straight-line basis over a five-year
period from commencement of operations. Any amount received by the Portfolio
from a corresponding Fund as a result of a redemption by Touchstone Advisors,
Inc. of any of its organizational seed capital shares of the Fund will be
applied so as to reduce the amount of unamortized organization expenses. The
amount paid by the Portfolio Trust on any withdrawal by the Select Advisors
Trust A or Select Advisors Trust C of all or a part of its organizational seed
capital investment ("Initial Interest") in the Portfolio will be reduced by a
portion of any unamortized organization expenses of the Portfolio, determined by
the proportion of the amount of the Initial Interest withdrawn to the aggregate
amount of the Initial Interests in the Portfolio then-outstanding after taking
into account any prior withdrawals of any portion of the Initial Interests in
the Portfolio.
h) Security Transactions. Securities transactions are recorded on a trade
date basis. For financial and tax reporting purposes, realized gains and losses
are determined on the basis of specific lot identification.
2. TRANSACTIONS WITH AFFILIATES
a) Investment Advisor. The Portfolio 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 Portfolio pays an investment advisory
fee that is computed daily and paid monthly. For the year ended December 31,
1997, each Portfolio incurred the following investment advisory fees equal on an
annual basis to the following percentages of the average daily net assets of the
Portfolio. The Balanced Portfolio's advisory fee changed on May 1, 1997, from
0.70% to 0.80%. The Growth & Income Portfolio's advisory fee changed on
September 17, 1997, from 0.75% to 0.80%.
<TABLE>
<CAPTION>
EMERGING INTERNATIONAL GROWTH & INCOME
GROWTH EQUITY INCOME BALANCED OPPORTUNITY BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ------------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Rate 0.80% 0.95% 0.77% 0.77% 0.65% 0.55%
</TABLE>
31
<PAGE> 34
SELECT ADVISORS PORTFOLIOS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
b) Trustees. Each Trustee who is not an "interested person", (as defined
in the Act), of the Portfolio 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 Portfolio Trust and from Select Advisors Trust
A, Select Advisors Trust C, and Select Advisors Variable Insurance Trust, which
are included in separate annual reports. For December 31, 1997, the Portfolio
Trust incurred $9,149 in Trustee fees which was prorated to each Portfolio.
3. PURCHASES AND SALES OF INVESTMENT SECURITIES
Investment transactions (excluding purchases and sales of U.S. government
and U.S. government agency obligations and excluding short-term investments) for
December 31, 1997, were as follows:
<TABLE>
<CAPTION>
COST OF PURCHASES PROCEEDS FROM SALES
----------------- -------------------
<S> <C> <C>
Emerging Growth Portfolio $ 6,590,581 $ 5,690,121
International Equity Portfolio 11,766,523 10,933,222
Growth & Income Portfolio 40,542,253 39,137,220
Balanced Portfolio 5,975,136 4,777,753
Income Opportunity Portfolio 29,673,647 26,118,264
Bond Portfolio 7,799,209 7,245,455
</TABLE>
The following Portfolios had transactions in U.S. government and U.S.
government agency obligations:
<TABLE>
<CAPTION>
COST OF PURCHASES PROCEEDS FROM SALES
----------------- -------------------
<S> <C> <C>
Balanced Portfolio $1,114,168 $1,059,066
Bond Portfolio 6,121,935 5,187,908
</TABLE>
4. EXPENSE REIMBURSEMENTS
For December 31, 1997, the Advisor has voluntarily agreed to reimburse each
Portfolio the following amounts:
<TABLE>
<CAPTION>
AMOUNT OF
REIMBURSEMENT
-------------
<S> <C>
Emerging Growth Portfolio $ 84,098
International Equity Portfolio 200,506
Growth & Income Portfolio 39,190
Balanced Portfolio 82,721
Income Opportunity Portfolio 62,571
Bond Portfolio 96,974
</TABLE>
5. RESTRICTED SECURITIES
Restricted securities may be difficult to dispose of and involve time
consuming negotiation and expense. Prompt sale of these securities may involve
the seller taking a discount to the security's stated market value. As of
December 31, 1997, Bond Portfolio held restricted securities valued by the
trustees of the Portfolio Trust at $859,157, representing 5.6% of net assets.
Acquisition date and cost of each are as follows:
<TABLE>
<CAPTION>
ACQUISITION DATE COST
---------------- --------
<S> <C> <C>
Mercantile Safe Deposit 3/28/85 $ 85,837
Central America, Series F 8/1/86 140,000
Central America, Series G 8/1/86 140,000
Central America, Series H 8/1/86 140,000
Republic of Honduras, Series C 5/1/88 100,000
Republic of Honduras, Series D 5/1/88 100,000
</TABLE>
Bond Portfolio received these securities from Western-Southern on October
4, 1994, in exchange for a proportionate interest in the Portfolio.
32
<PAGE> 35
Select Advisors Portfolios
Report of Independent Accountants
To the Investors and Trustees of
the Select Advisors Portfolios:
We have audited the accompanying statements of assets and liabilities of
Select Advisors Portfolios (the "Portfolios") (consisting of Emerging Growth
Portfolio, International Equity Portfolio, Growth and Income Portfolio, Balanced
Portfolio, Income Opportunity Portfolio and Bond Portfolio), including the
schedules of investments, as of December 31, 1997, the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and supplemental data for each of
the three years in the period then ended and for the period from October 3, 1994
(commencement of operations) to December 31, 1994. These financial statements
and supplemental data are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial statements and
supplemental data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplemental
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and supplemental data referred to
above present fairly, in all material respects, the financial position of the
Select Advisors Portfolios as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the supplemental data for each of the
three years in the period then ended and for the period from October 3, 1994
(commencement of operations) to December 31, 1994, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 13, 1998
33
<PAGE> 36
DISTRIBUTOR
Touchstone Securities, Inc.
311 Pike Street
Cincinnati, Ohio 45202
(800) 669-2796
INVESTMENT ADVISOR OF EACH PORTFOLIO
Touchstone Advisors, Inc.
311 Pike Street
Cincinnati, Ohio 45202
ADMINISTRATOR AND CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 8518
Boston, Massachusetts 02266-8518
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One International Place
Boston, Massachusetts 02110
LEGAL COUNSEL
Frost & Jacobs
2500 PNC Center
201 East 5th Street
Cincinnati, Ohio 45202
- --------------------------------------------------------------------------------
TOUCHSTONE
--------------------------------------------------
THE MARK OF EXCELLENCE IN INVESTMENT MANAGEMENT(TM)
FORM 7076-9712
- --------------------------------------------------------------------------------
<PAGE> 37
[TOUCHSTONE CORPORATED LOGO]
TOUCHSTONE
------------------------------------------------
THE TOUCHSTONE FAMILY OF FUNDS
-----------------------
TOUCHSTONE STANDBY INCOME FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<PAGE> 38
Dear Fellow Shareholder:
The current "golden age" of moderate growth, low interest rates, low
inflation, and robust corporate earnings -- has been good for stocks. Let's not
forget, though, that this kind of market will not always be around. Certainly
not when there are so many unfamiliar situations surrounding us: the Asian
currency crisis, the year 2000 issue, tensions in the Middle East, or simply
that stocks have been so hot for so long. Simply speaking, there's nothing the
market hates more than uncertainty, and we've experienced a lot of it lately.
Most people attribute the stock market's exceptionally strong rise and
recent volatility to the huge flood of money that has poured into equity mutual
funds. The 1995-97 total of nearly $600 billion new cash invested in equity
funds is an impressive figure. It has added 70% of the total assets accumulated
by the mutual fund industry over its entire 72 years of existence. But the
dominant reason why investors have wanted to put so much money into stocks is
that the last three years have been the most favorable for corporate profit
growth in well over 50 years.
It's times like these that the Touchstone brand of investment management
makes sense. Because the truth is, no matter where the market's go, there are
always good stocks available. At Touchstone, we hire only the best portfolio
managers who look for these companies one at a time, using every possible means
of rigorous financial analysis to hands-on, face-to-face research, in quest of
an edge nobody else has. That's how Touchstone helps investors get where they
need to go.
We've been through volatile times before, and there's a good chance we'll
have to face them again. The particulars may change, but the commitment of each
and every member of the Touchstone administrative and portfolio team -- and the
discipline they employ -- remains the same.
Please review the enclosed financial statements for portfolio updates and
performance numbers for important information about the investment you have
chosen.
Going forward, I urge you to be reasonable in your expectations. Now, more
than ever, it's important to take a long-term view. So I ask that you carefully
review the shorter-term risks associated with your investments and make sure
they truly fit your comfort level. Your financial advisor can help you adjust
your investment strategy to meet any of your changing needs.
We appreciate your continued confidence and investment in the Touchstone
Family of Funds and Variable Annuities(1).
Sincerely,
/S/ EDWARD G. HARNESS
- -------------------------------------
Edward G. Harness
President and Chief Executive Officer
Touchstone Family of Funds
P.S. Please visit us on the World Wide Web at www.touchstonefunds.com
- ---------------
(1) Touchstone Variable Annuities are underwritten by Western-Southern Life
Assurance Company, Cincinnati, Ohio, Touchstone Family of Funds and Variable
Annuities are distributed by Touchstone Securities, Inc., member NASD and SIPC.
<PAGE> 39
- --------------------------------------------------------------------------------
TOUCHSTONE STANDBY INCOME FUND
- --------------------------------------------------------------------------------
Over the course of the annual year December 31, 1997, 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 5.3% while the return of the Donoghue Money Market
Average rose 5.1%. Total return (net of fees and expenses) for the Touchstone
Standby Income Fund was 5.2%.
As the ultra-short fixed income manager of the Touchstone Standby Income
Fund, Fort Washington Investment Advisors maintained its core investment
strategy by maintaining a stable average maturity slightly longer than the
90-day Treasury bill. During the second half of 1997, Fort Washington's
portfolio was overweighted in commercial paper and underweighted in asset-backed
securities and corporate bonds. This gave them liquidity as interest rates rose.
When Fort Washington believed that interest rates had stabilized, they reacted
by buying longer maturity corporates and asset-backed securities. These types of
securities had become cheap, on a relative basis, as other investors began to
sell their positions in search of liquidity. Finally, as the Asian crisis
started to unfold and spreads began to widen in the corporate bond market,
asset-backed securities were in short supply and high demand. This sector
selection strategy protected principal and kept the fund liquid.
[TOUCHSTONE INCOME FUND GRAPH]
<TABLE>
<CAPTION>
Touchstone Merrill Lynch 91- IBC Donoghue
Measurement Period Standby Income day Treasury Money Market
(Fiscal Year Covered) Fund Index Index
<S> <C> <C> <C>
Sep-94 $10000 $10000 $10000
Dec-94 10115 10117 10133
Mar-95 10248 10254 10285
Jun-95 10400 10396 10439
Sep-95 10527 10535 10588
Dec-95 10692 10673 10744
Mar-96 10806 10805 10876
Jun-96 10940 10934 11016
Sep-96 11078 11066 11168
Dec-96 11208 11201 11314
Mar-97 11346 11336 11458
Jun-97 11492 11478 11614
Sep-97 11646 11623 11769
Dec-97 11792 11770 11917
</TABLE>
1
<PAGE> 40
TOUCHSTONE STANDBY INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------- ----------
<C> <S> <C>
ASSET BACKED SECURITIES (18.9%)
$ 400,000 CS First Boston,
6.32%, 02/25/18.............. $ 398,992
266,142 Daimler-Benz,
5.85%, 07/20/03.............. 265,833
307,512 First Security Auto Grantor
Trust, 6.25%, 01/15/01....... 307,927
57,654 Honda Auto Receivables Grantor
Trust, 6.20%, 12/15/00....... 57,725
320,000 Olympic Auto Trust,
5.85%, 07/15/01.............. 319,171
276,485 Olympic Auto Trust,
6.95%, 06/15/01.............. 277,945
----------
TOTAL ASSET BACKED SECURITIES
(COST $1,627,840)......................... 1,627,593
----------
CORPORATE BONDS (16.5%)
BANKING (4.6%)
400,000 Credit Lyonnais(a),
6.75%, 09/19/49.............. 399,000
----------
COMMERCIAL SERVICES (4.7%)
400,000 Columbus and Southern Ohio,
7.00%, 06/01/98.............. 400,247
----------
ELECTRIC UTILITIES (2.9%)
250,000 Boston Edison,
5.95%, 03/15/98.............. 249,845
----------
TELEPHONE SYSTEMS (4.3%)
370,000 AT&T Capital,
(5.87%), 08/28/98............ 369,350
----------
TOTAL CORPORATE BONDS
(COST $1,418,326)......................... 1,418,442
----------
COMMERCIAL PAPER (62.6%)
400,000 Autoliv, 5.94%, 01/16/98....... 395,710
405,000 Case Credit, 6.25%, 01/29/98... 401,977
395,000 Cinergy, 6.12%, 01/28/98....... 391,172
400,000 Conagra, 6.40%, 01/07/98....... 398,860
360,000 Crown Cork & Seal,
5.85%, 01/30/98.............. 358,245
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------- ----------
<C> <S> <C>
$ 400,000 Hanson Financial,
6.15%, 01/13/98.............. $ 397,677
400,000 IES Diversified,
6.18%, 01/30/98.............. 396,841
400,000 Merrill Lynch,
6.03%, 01/09/98.............. 398,794
200,000 Occidental Petroleum,
6.40%, 01/15/98.............. 199,467
175,000 Pennsylvania Fuel,
7.00%, 01/13/98.............. 174,490
420,000 Ryder Systems,
5.80%, 03/06/98.............. 415,534
400,000 Safeway Stores,
6.12%, 01/07/98.............. 398,231
330,000 Texas Utilities,
6.08%, 01/21/98.............. 327,381
355,000 Union Pacific,
5.85%, 02/02/98.............. 353,096
380,000 US West Capital Funding,
6.15%, 01/16/98.............. 377,663
----------
TOTAL COMMERCIAL PAPER (COST
$5,385,138)............................... 5,385,138
----------
TOTAL INVESTMENTS AT VALUE (98.0%) (COST
$8,431,304)(b)............................ 8,431,173
CASH AND OTHER ASSETS NET OF LIABILITIES
(2.0%).................................... 171,758
----------
NET ASSETS (100.0%)....................... $8,602,931
==========
</TABLE>
- ------------------------------
(a) Interest rate shown reflects current rate on instrument with variable rate.
(b) The aggregate identified cost for federal income tax purposes is $8,431,304,
resulting in gross unrealized appreciation and depreciation of $570 and
$701, respectively, and net unrealized depreciation of $(131).
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 41
TOUCHSTONE STANDBY INCOME FUND
Statement of Assets and Liabilities
December 31, 1997
<TABLE>
- --------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at value (Note 1) (Cost $8,431,304) $8,431,173
Cash 7,556
Receivable for:
Receivable for fund shares sold 63
Interest 36,565
Deferred organization expenses (Note 1) 22,739
Reimbursement receivable from Advisor (Note 3) 173,810
----------
Total assets 8,671,906
----------
LIABILITIES:
Distribution payable from income 1,744
Payable for fund shares redeemed 1,161
Other accrued expenses 66,070
----------
Total liabilities 68,975
----------
NET ASSETS: $8,602,931
==========
Net asset value, offering and redemption price
per share: ($8,602,931 / 862,865 shares) $ 9.97
==========
</TABLE>
Statement of Operations
For the year ended December 31, 1997
<TABLE>
- --------------------------------------------------------------------------------------------
<S> <C>
INTEREST INCOME (NOTE 1): $ 441,825
---------
EXPENSES:
Investment advisory (Note 2) $ 18,755
Administration and fund accounting 68,412
Transfer agent 59,282
Registration 37,328
Custody 18,380
Auditing 17,380
Amortization of organization expenses (Note 1) 12,951
Printing 11,135
Sponsor fee (Note 2) 15,003
Legal 2,606
Trustee (Note 2) 1,284
Miscellaneous 1,066
---------
Total expenses 263,582
Waiver of Sponsor fee (Note 2) (15,003)
Reimbursement from Advisor (Note 3) (192,319)
---------
Net expenses 56,260
---------
NET INVESTMENT INCOME 385,565
---------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on investments (1,729)
Net change in unrealized depreciation on investments (499)
---------
Net realized and unrealized loss (2,228)
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS: $ 383,337
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 42
TOUCHSTONE STANDBY INCOME FUND
Statements of Changes in Net Assets
<TABLE>
- -------------------------------------------------------------------------------------------------
<CAPTION>
For the years ended December 31, 1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 385,565 $ 301,782
Net realized gain (loss) on investments (1,729) 4,350
Net change in unrealized (depreciation) on investments (499) (14,207)
---------- ----------
Net increase in net assets resulting from operations 383,337 291,925
---------- ----------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income (392,547) (309,188)
Net realized capital gains -- (1,159)
---------- ----------
Total dividends and distributions (392,547) (310,347)
---------- ----------
SHARE TRANSACTIONS:
Proceeds from shares sold 4,360,586 786,903
Reinvestment of dividends 383,218 308,115
Cost of shares redeemed (2,587,318) (530,792)
---------- ----------
Net increase from share transactions 2,156,486 564,226
---------- ----------
TOTAL CHANGES IN NET ASSETS 2,147,276 545,804
NET ASSETS:
Beginning of period 6,455,655 5,909,851
---------- ----------
End of period $8,602,931 $6,455,655
========== ==========
NET ASSETS CONSIST OF:
Paid-in capital $8,602,555 $6,453,052
Undistributed net investment income 4,343 2,838
Accumulated net realized loss on investments (3,836) (603)
Net unrealized appreciation (depreciation) of investments (131) 368
---------- ----------
Net assets applicable to shares outstanding $8,602,931 $6,455,655
========== ==========
SHARES OUTSTANDING:
Shares sold 437,016 78,751
Reinvestment of dividends and distributions 38,406 30,835
---------- ----------
475,422 109,586
Shares redeemed (259,339) (53,105)
---------- ----------
Net increase 216,083 56,481
Beginning of period 646,782 590,301
---------- ----------
End of period 862,865 646,782
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 43
<TABLE>
- -------------------------------------------------------------------------------------------------
TOUCHSTONE STANDBY INCOME FUND
Financial Highlights
- -------------------------------------------------------------------------------------------------
<CAPTION>
Selected data for a share outstanding throughout
the years ended December 31, 1997 1996 1995 1994(a)
- ---------------------------------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.98 $10.01 $10.03 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.51 0.46 0.55 0.11
Net realized and unrealized gain (loss) on investments (0.00) 0.01 (0.02) 0.03
------ ------ ------ ------
Total from investment operations 0.51 0.47 0.53 0.14
------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.52) (0.50) (0.55) (0.11)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.97 $ 9.98 $10.01 $10.03
====== ====== ====== ======
TOTAL RETURN(d) 5.21% 4.80% 5.71% 1.40%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $8,603 $6,456 $5,910 $5,048
Ratios to average net assets:
Net expenses(b) 0.75% 0.75% 0.75% 1.00%(c)
Net investment income 5.14% 4.88% 5.32% 4.54%(c)
Portfolio turnover 285% 20% 142% 0%
</TABLE>
- ------------------------------
(a) The Fund commenced operations on October 3, 1994.
(b) If the waiver and reimbursement had not been in place for the periods
listed, and after consideration of state expense limitations, the ratios of
expenses to average net assets would have been higher.
(c) Ratios are annualized.
(d) Total return would have been lower had certain expenses not been reimbursed
or waived during the periods shown.
TOUCHSTONE STANDBY INCOME FUND
Notes to Financial Statements
- --------------------------------------------------------------------------------
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, (the "Act") 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 shares of
beneficial interests in the Fund. At December 31, 1997, Western-Southern Life
Assurance Company ("Western-Southern") owned 70.5% 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 portfolio 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.
Income and realized gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences which may result in distribution
5
<PAGE> 44
TOUCHSTONE STANDBY INCOME FUND
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
re-classifications are primarily due to non-deductible organization costs,
passive foreign investment companies, foreign currency transactions, losses
deferred due to wash sales, and excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital. Undistributed
net investment income 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.
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 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. At December 31, 1997 the Fund
has capital loss carryforwards of $603 expiring in December 2003, and $41
expiring in December 2005.
Additionally, at December 31, 1997, the Fund has $3,193 of net capital
losses attributable to security transactions incurred after October 31, 1997,
which are treated as arising on the first day of the Fund's next taxable year.
f) Repurchase Agreements. The 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. The 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.
g) Securities Transactions. Securities transactions are recorded on a
trade date basis. For financial and tax reporting purposes, realized gains and
losses are determined on the basis of specific lot identification.
2. TRANSACTIONS WITH AFFILIATES
a) Investment Advisory Fees. The Trust has an investment advisory
agreement with Touchstone Advisors, Inc., a subsidiary of Western-Southern, (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 the Fund, has entered into a
Sponsor Agreement with Touchstone Advisors, Inc. (the "Sponsor"). 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 the Fund equal on an annual basis to 0.20% of the average daily net assets
of the Fund. The Sponsor has advised the Trust that it will waive all fees under
the Sponsor Agreement through December 31, 1998.
c) 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
Portfolio, and Select Advisors Variable Insurance Trust, which are included in
separate reports. For December 31, 1997 the Fund incurred $1,284 in Trustee
fees.
6
<PAGE> 45
TOUCHSTONE STANDBY INCOME FUND
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
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. For the year ended December 31, 1997 the Advisor reimbursed the Fund
$192,319.
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
Purchases and sales of investment securities (excluding short-term
investments and U.S. government obligations) amounted to $5,992,980 and
$4,699,793, respectively, for the year ended December 31, 1997.
Purchases and sales of U.S. government obligations amounted to $1,461,780
and $2,031,887, respectively, for the year ended December 31, 1997.
7
<PAGE> 46
- --------------------------------------------------------------------------------
TOUCHSTONE STANDBY INCOME FUND
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Investors and Trustees of
Touchstone Standby Income Fund:
We have audited the accompanying statements of assets and liabilities of
Touchstone Standby Income Fund of Select Advisors Trust A (the "Fund") including
the schedule of investments, as of December 31, 1997, the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and financial highlights for each
of the three years in the period then ended and for the period from October 3,
1994 (commencement of operations) to December 31, 1994. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Touchstone Standby Income Fund of Select Advisors Trust A as of December 31,
1997, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended and the financial
highlights for each of the three years in the period then ended and for the
period from October 3, 1994 (commencement of operations) to December 31, 1994,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 13, 1998
8
<PAGE> 47
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 AND CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 8518
Boston, Massachusetts 02266-8518
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One International Place
Boston, Massachusetts 02110
LEGAL COUNSEL
Frost & Jacobs
2500 PNC Center
201 East 5th Street
Cincinnati, Ohio 45202
- --------------------------------------------------------------------------------
TOUCHSTONE
-------------------------------------------
THE MARK OF EXCELLENCE IN INVESTMENT MANAGEMENT(TM)
FORM 7078-9712
- --------------------------------------------------------------------------------
