<PAGE> 1
[LOGO] TOUCHSTONE
------------------------------
The Touchstone Family of Funds
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Select Advisors Trust C
- Touchstone Emerging Growth Fund C
- Touchstone International Equity Fund C
- Touchstone Growth & Income Fund C
- Touchstone Balanced Fund C
- Touchstone Income Opportunity Fund C
- Touchstone Bond Fund C
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1997
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<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. Keep in mind
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 of 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 markets go, there are
always good stocks available. At Touchstone, our portfolio managers look for
these companies one at a time, using every possible means, from 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 C
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected Touchstone Emerging
Growth Fund C's performance. Small capitalization stocks, as measured by the
Russell 2000, rose 22.4% while the total return (net of fees and expenses) for
the Touchstone Emerging Growth Fund C was 30.7%.
As the value-style manager of the Touchstone Emerging Growth Fund C, 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 C, 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 c Index MF
<S> <C> <C> <C>
Sep-94 10000 10000 10000
Dec-94 10252 9813 9950
Mar-95 10627 10265 10512
Jun-95 11287 11227 11450
Sep-95 12306 12336 12785
Dec-95 12421 12603 13072
Mar-96 12943 13246 13917
Jun-96 13486 13909 15025
Sep-96 13108 13956 15319
Dec-96 13620 14682 15758
Mar-97 13044 13923 14745
Jun-97 15310 16180 17262
Sep-97 17773 18588 20184
Dec-97 17800 17965 19166
</TABLE>
1
<PAGE> 4
TOUCHSTONE INTERNATIONAL EQUITY FUND C
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone
International Equity Fund C's performance. International equity stocks, as
measured by the MSCI EAFE Index, rose 2.0% while the total return (net of fees
and expenses) for the Touchstone International Equity Fund C was 14.7%.
As the international equity manager of the Touchstone International Equity Fund
C, 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 C Index MF
<S> <C> <C> <C>
Sep-94 10000 10000 10000
Dec-94 9100 9898 9687
Mar-95 8730 10082 9858
Jun-95 9090 10156 10582
Sep-95 9480 10579 11295
Dec-95 9520 11007 11495
Mar-96 10070 11325 12164
Jun-96 10270 11505 12739
Sep-96 10170 11490 12880
Dec-96 10540 11673 13435
Mar-97 10680 11490 13450
Jun-97 11930 12990 15099
Sep-97 12470 12907 16032
Dec-97 12093 11905 15112
</TABLE>
TOUCHSTONE GROWTH & INCOME FUND C
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Growth &
Income Fund C's performance. Growth & Income stocks, as measured by the S&P 500
Index, rose 33.4% while the total return (net of fees and expenses) for the
Touchstone Growth & Income Fund C was 19.2%.
As the growth and income manager of the Touchstone Growth & Income Fund C,
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 C Index MF
<S> <C> <C> <C>
Sep-94 10000 10000 10000
Dec-94 10010 9998 9837
Mar-95 11010 10972 10594
Jun-95 11811 12019 11428
Sep-95 12800 12974 12248
Dec-95 13535 13756 12823
Mar-96 14504 14494 13525
Jun-96 14914 15144 13969
Sep-96 15208 15612 14370
Dec-96 15707 16914 15415
Mar-97 15002 17367 15583
Jun-97 16701 20399 17768
Sep-97 18204 21927 19305
Dec-97 18716 22557 19477
</TABLE>
2
<PAGE> 5
TOUCHSTONE BALANCED FUND C
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Balanced
Fund C'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 and
expenses) for the Touchstone Balanced Fund C was 18.4%.
As the balanced fund manager of the Touchstone Balanced Fund C, 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) C Index Index MF
<S> <C> <C> <C> <C>
Sep-94 10000 10000 10000 10000
Dec-94 10020 9998 10038 9893
Mar-95 10542 10972 10544 10501
Jun-95 11527 12019 11187 11245
Sep-95 12206 12974 11406 11849
Dec-95 12259 13756 11892 12337
Mar-96 12660 14494 11681 12656
Jun-96 12780 15144 11748 12954
Sep-96 13183 15612 11965 13300
Dec-96 14202 16914 12324 13973
Mar-97 14121 17367 12256 13964
Jun-97 15636 20399 12707 15380
Sep-97 16535 21927 13131 16397
Dec-97 16811 22557 13514 16577
</TABLE>
3
<PAGE> 6
TOUCHSTONE INCOME OPPORTUNITY FUND C
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Income
Opportunity Fund C'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 and
expenses) for the Touchstone Income Opportunity Fund C was 8.6%.
As the manager of the Touchstone Income Opportunity Fund C, 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) C Index MF MF
<S> <C> <C> <C> <C>
Sep-94 10000 10000 10000 10000
Dec-94 9261 10043 9878 9881
Mar-95 8737 10638 10234 10316
Jun-95 10130 11429 10784 10850
Sep-95 10764 11699 11018 11180
Dec-95 11315 12277 11483 11515
Mar-96 11909 11960 11466 11811
Jun-96 12588 12014 11687 12036
Sep-96 13568 12254 12107 12582
Dec-96 14244 12681 12550 13030
Mar-97 14475 12553 12323 13103
Jun-97 15406 13070 12668 13764
Sep-97 16151 13582 12977 14483
Dec-97 15467 13978 12961 14674
</TABLE>
4
<PAGE> 7
TOUCHSTONE BOND FUND C
Over the course of the year ending December 31, 1997, several investment
management strategies and techniques materially affected the Touchstone Bond
Fund C'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
and expenses) for the Touchstone Bond Fund C was 6.4%.
As the core fixed income manager of the Touchstone Bond Fund C, 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 C Index MF
<S> <C> <C> <C>
Sep-94 10000 10000 10000
Dec-94 10019 10038 9985
Mar-95 10537 10544 10418
Jun-95 11070 11187 11104
Sep-95 11217 11406 11331
Dec-95 11646 11892 11867
Mar-96 11373 11681 11588
Jun-96 11402 11748 11629
Sep-96 11576 11965 11842
Dec-96 11881 12324 12223
Mar-97 11821 12256 12134
Jun-97 12163 12707 12571
Sep-97 12522 13131 12999
Dec-97 12638 13514 13307
</TABLE>
5
<PAGE> 8
(THIS PAGE INTENTIONALLY LEFT BLANK)
6
<PAGE> 9
SELECT ADVISORS TRUST C
Statements 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 C FUND C FUND C FUND C FUND C FUND C
---------- ------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investment in corresponding Select
Advisors Portfolios, at value
(Note 1) $2,751,499 $3,940,053 $1,957,080 $2,721,538 $3,805,244 $664,636
Deferred organization expenses
(Note 1) 16,514 16,514 16,514 16,514 16,514 16,514
Receivable for fund shares sold 464 463 557 188 6,669 214
Reimbursement receivable from Sponsor
(Note 3) 100,242 119,021 94,462 101,399 35,940 83,294
---------- ---------- ---------- ---------- ---------- --------
Total assets 2,868,719 4,076,051 2,068,613 2,839,639 3,864,367 764,658
---------- ---------- ---------- ---------- ---------- --------
LIABILITIES:
Other accrued expenses 34,596 42,216 29,834 32,680 40,533 25,392
---------- ---------- ---------- ---------- ---------- --------
Total liabilities 34,596 42,216 29,834 32,680 40,533 25,392
---------- ---------- ---------- ---------- ---------- --------
NET ASSETS: $2,834,123 $4,033,835 $2,038,779 $2,806,959 $3,823,834 $739,266
========== ========== ========== ========== ========== ========
Shares outstanding 200,570 357,858 140,703 230,973 395,636 73,508
========== ========== ========== ========== ========== ========
Net asset value, offering and
redemption price per share $ 14.13 $ 11.27 $ 14.49 $ 12.15 $ 9.67 $ 10.06
========== ========== ========== ========== ========== ========
</TABLE>
Statements of Operations
For the year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME ALLOCATED FROM
CORRESPONDING PORTFOLIO (Note 1):
Interest income $ 6,597 $ 7,846 $ 2,915 $ 67,966 $ 422,433 $ 49,676
Dividend income 20,266 57,907(a) 29,850 17,315 -- 2,098
--------- ---------- --------- --------- ---------- --------
Total investment income 26,863 65,753 32,765 85,281 422,433 51,774
--------- ---------- --------- --------- ---------- --------
EXPENSES:
Allocated portfolio expenses 34,126 60,283 20,510 36,473 43,716 6,105
Fund accounting and administration 14,750 18,164 16,834 15,035 15,315 16,834
Registration 12,101 12,573 9,903 11,117 11,697 11,853
Transfer agent 34,399 35,041 36,111 33,600 37,485 30,886
Amortization of organization
expenses (Note 1) 9,402 9,402 9,402 9,402 9,402 9,402
Audit 11,922 12,872 11,739 11,234 12,654 11,783
Distribution (Note 2) 24,784 36,818 16,906 24,915 33,780 7,641
Sponsor fee (Note 2) 4,498 7,366 3,383 4,982 6,756 1,525
Printing 2,681 9,842 2,012 4,478 7,113 (1,285)
Trustee (Note 2) 310 539 558 356 485 116
Legal 1,033 1,453 624 1,137 1,381 566
Miscellaneous 826 1,190 1,136 993 1,862 475
--------- ---------- --------- --------- ---------- --------
Total expenses 150,832 205,543 129,118 153,722 181,646 95,901
Waiver of sponsor fees (Note 2) (4,498) (7,366) (3,383) (4,982) (6,756) (1,525)
Reimbursement from sponsor (Note
3) (95,744) (111,655) (91,079) (96,417) (109,436) (81,769)
--------- ---------- --------- --------- ---------- --------
NET EXPENSES 50,590 86,522 34,656 52,323 65,454 12,607
--------- ---------- --------- --------- ---------- --------
NET INVESTMENT INCOME (LOSS) (23,727) (20,769) (1,891) 32,958 356,979 39,167
--------- ---------- --------- --------- ---------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
FROM PORTFOLIO:
Net realized gain 323,521 486,229(b) 225,936 465,528 168,945 1,853
Net change in unrealized
appreciation (depreciation) 307,612 30,009(c) 86,797 (84,212) (283,790) 8,153
--------- ---------- --------- --------- ---------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) FROM PORTFOLIO 631,133 516,238 312,733 381,316 (114,845) 10,006
--------- ---------- --------- --------- ---------- --------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 607,406 $ 495,469 $ 310,842 $ 414,274 $ 242,134 $ 49,173
========= ========== ========= ========= ========== ========
</TABLE>
- ------------------------------
(a) Net of foreign tax withholding of $6,619.
(b) Includes foreign currency transactions loss of $22,081.
(c) Includes change in unrealized appreciation on foreign currency transactions
and other assets of $313.
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 10
SELECT ADVISORS TRUST C
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOUCHSTONE EMERGING TOUCHSTONE INTERNATIONAL
GROWTH FUND C EQUITY FUND C
-------------------------- --------------------------
1997 1996 1997 1996
FOR THE YEARS ENDED DECEMBER 31, ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (23,727) $ (13,185) $ (20,769) $ (9,278)
Net realized gain (loss) 323,521 68,137 486,229 66,056
Net change in unrealized appreciation (depreciation) 307,612 84,757 30,009 227,324
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations 607,406 139,709 495,469 284,102
---------- ---------- ---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- -- --
Realized capital gains (225,979) (53,274) (273,265) --
Distributions in excess of net investment income -- (49,794) -- --
Distributions in excess of capital gains -- -- -- --
---------- ---------- ---------- ----------
Total dividends and distributions (225,979) (103,068) (273,265) --
---------- ---------- ---------- ----------
SHARE TRANSACTIONS (Note 1):
Proceeds from shares sold 713,308 351,987 561,135 406,681
Reinvestment of dividends and distributions 225,679 102,769 269,287 --
Cost of shares redeemed (250,359) (6,119) (175,631) (16,241)
---------- ---------- ---------- ----------
Net increase from share transactions: 688,628 448,637 654,791 390,440
---------- ---------- ---------- ----------
TOTAL INCREASE IN NET ASSETS 1,070,055 485,278 876,995 674,542
NET ASSETS:
Beginning of period 1,764,068 1,278,790 3,156,840 2,482,298
---------- ---------- ---------- ----------
End of period $2,834,123 $1,764,068 $4,033,835 $3,156,840
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Paid-in capital $2,251,248 $1,569,632 $3,599,360 $2,947,515
Undistributed (distribution in excess of) net investment
income -- -- (16,192) (1,422)
Accumulated net realized gain (loss) from Portfolio 25,037 (55,790) 63,937 (145,974)
Net unrealized appreciation (depreciation) from Portfolio 557,838 250,226 386,730 356,721
---------- ---------- ---------- ----------
Net assets applicable to shares outstanding $2,834,123 $1,764,068 $4,033,835 $3,156,840
========== ========== ========== ==========
SHARES OUTSTANDING (Note 1):
Shares sold 52,455 29,496 49,430 40,286
Reinvestment of dividends and distributions 16,437 8,776 24,022 --
---------- ---------- ---------- ----------
68,892 38,272 73,452 40,286
Shares redeemed (18,070) (514) (15,117) (1,599)
---------- ---------- ---------- ----------
Net increase 50,822 37,758 58,335 38,687
Beginning of period 149,748 111,990 299,523 260,836
---------- ---------- ---------- ----------
End of period 200,570 149,748 357,858 299,523
========== ========== ========== ==========
</TABLE>
- ------------------------------
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 11
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
TOUCHSTONE GROWTH & TOUCHSTONE BALANCED TOUCHSTONE INCOME TOUCHSTONE BOND
INCOME FUND C FUND C OPPORTUNITY FUND C FUND C
----------------------- ----------------------- ----------------------- -------------------
1997 1996 1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (1,891) $ (1,633) $ 32,958 $ 23,763 $ 356,979 $ 201,268 $ 39,167 $ 28,309
225,936 82,827 465,528 70,831 168,945 171,388 1,853 (2,556)
86,797 16,656 (84,212) 160,378 (283,790) 73,267 8,153 (6,458)
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
310,842 97,850 414,274 254,972 242,134 445,923 49,173 19,295
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
(4,621) (5,307) (33,535) (30,686) (355,645) (194,606) (40,197) (34,508)
(208,515) (77,144) (440,674) (69,459) (199,664) (98,304) -- (1,037)
-- -- (9,083) -- -- -- (6,108) --
-- -- -- -- (109,728) -- -- --
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
(213,136) (82,451) (483,292) (100,145) (665,037) (292,910) (46,305) (35,545)
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
1,000,440 847,270 876,638 367,673 1,599,237 1,175,852 626,324 389,896
190,564 64,195 460,589 94,325 577,162 258,039 46,135 30,805
(469,773) (34,812) (431,746) (25,903) (562,855) (156,973) (571,421) (109,359)
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
721,231 876,653 905,481 436,095 1,613,544 1,276,918 101,038 311,342
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
818,937 892,052 836,463 590,922 1,190,641 1,429,931 103,906 295,092
1,219,842 327,790 1,970,496 1,379,574 2,633,193 1,203,262 635,360 340,268
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
$2,038,779 $1,219,842 $2,806,959 $1,970,496 $3,823,834 $2,633,193 $739,266 $635,360
========== ========== ========== ========== ========== ========== ======== ========
$1,871,667 $1,161,568 $2,576,151 $1,677,723 $4,089,891 $2,487,960 $725,896 $632,081
706 184 1,883 167 2,805 -- 1,215 1,030
29,043 7,524 28,017 7,486 (106,419) 23,886 (973) (2,726)
137,363 50,566 200,908 285,120 (162,443) 121,347 13,128 4,975
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
$2,038,779 $1,219,842 $2,806,959 $1,970,496 $3,823,834 $2,633,193 $739,266 $635,360
========== ========== ========== ========== ========== ========== ======== ========
68,486 61,615 65,015 31,351 145,714 112,192 62,123 38,637
13,381 4,661 38,136 7,690 56,562 24,284 4,580 3,071
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
81,867 66,276 103,151 39,041 202,276 136,476 66,703 41,708
(30,951) (2,542) (31,124) (2,224) (51,460) (14,441) (56,366) (10,852)
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
50,916 63,734 72,027 36,817 150,816 122,035 10,337 30,856
89,787 26,053 158,946 122,129 244,820 122,785 63,171 32,315
---------- ---------- ---------- ---------- ---------- ---------- -------- --------
140,703 89,787 230,973 158,946 395,636 244,820 73,508 63,171
========== ========== ========== ========== ========== ========== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 12
SELECT ADVISORS TRUST C
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOUCHSTONE EMERGING GROWTH
FUND C
-------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS 1997 1996 1995 1994(a)
ENDED DECEMBER 31, ------ ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.78 $11.42 $10.11 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.12) -- (0.02) 0.13
Net realized and unrealized gain (loss) on investments 3.70 1.10 2.16 0.12
------ ------ ------ ------
Total from investment operations 3.58 1.10 2.14 0.25
------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- (0.01) (0.13)
Realized capital gain (1.23) (0.74) (0.82) (0.01)
------ ------ ------ ------
Total dividends and distributions (1.23) (0.74) (0.83) (0.14)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.13 $11.78 $11.42 $10.11
====== ====== ====== ======
TOTAL RETURN (e) 30.67% 9.67% 21.15% 2.52%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $2,834 $1,764 $1,279 $1,022
Ratios to average net assets (b):
Net expenses 2.25% 2.25% 2.25% 2.50%
Net investment income (loss) (1.05%) (0.88%) (0.81%) 5.29%
</TABLE>
<TABLE>
<CAPTION>
TOUCHSTONE BALANCED
FUND C
-------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS 1997 1996 1995 1994(a)
ENDED DECEMBER 31, ------ ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.40 $11.30 $ 9.97 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.18 0.22 0.25 0.07
Net realized and unrealized gain (loss) on investments 2.06 1.56 1.98 (0.05)
------ ------ ------ ------
Total from investment operations 2.24 1.78 2.23 0.02
------ ------ ------ ------
LESS: DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (0.22) (0.22) (0.27) (0.05)
Realized capital gain (2.27) (0.46) (0.63)
------ ------ ------ ------
Total dividends and distributions (2.49) (0.68) (0.90) (0.05)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.15 $12.40 $11.30 $ 9.97
====== ====== ====== ======
TOTAL RETURN (e) 18.37% 15.85% 22.40% 0.20%
RATIOS AND SUPPLEMENTAL DATA:
Net assets at end of period (000's) $2,807 $1,970 $1,380 $ 999
Ratios to average net assets (b):
Net expenses 2.10% 2.10% 2.10% 2.35%
Net investment income 1.32% 1.44% 1.63% 2.00%
</TABLE>
- ------------------------------
(a) The Fund commenced operations on October 3, 1994.
(b) 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.
(c) Per share amounts have been calculated using the average share method.
(d) Ratios are annualized.
(e) Total return is calculated without the effects of a redemption charge. Total
returns would have been lower had certain expenses not been reimbursed or
waived during the periods shown.
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 13
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
TOUCHSTONE INTERNATIONAL EQUITY TOUCHSTONE GROWTH & INCOME
FUND C FUND C
- ---------------------------------- -----------------------------------
1997 1996 1995 1994(a) 1997 1996 1995(c) 1994(a)
- ------ ------ ------ ------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$10.54 $ 9.52 $ 9.10 $10.00 $13.59 $12.58 $10.01 $10.00
- ------ ------ ------ ------ ------ ------ ------ ------
(0.06) -- (0.05) -- (0.01) 0.10 (0.01) 0.82
1.61 1.02 0.47 (0.90) 2.59 1.92 3.51 (0.81)
- ------ ------ ------ ------ ------ ------ ------ ------
1.55 1.02 0.42 (0.90) 2.58 2.02 3.50 0.01
- ------ ------ ------ ------ ------ ------ ------ ------
-- -- -- -- (0.04) (0.10) (0.42) --
(0.82) -- -- -- (1.64) (0.91) (0.51) --
- ------ ------ ------ ------ ------ ------ ------ ------
(0.82) -- -- -- (1.68) (1.01) (0.93) --
- ------ ------ ------ ------ ------ ------ ------ ------
$11.27 $10.54 $ 9.52 $ 9.10 $14.49 $13.59 $12.58 $10.01
====== ====== ====== ====== ====== ====== ====== ======
14.73% 10.71% 4.62% (9.00%) 19.16% 16.04% 35.22% 0.10%
4,034 $3,157 $2,482 $2,274 $2,039 $1,220 $ 328 $ 21
2.35% 2.35% 2.35% 2.60% (d) 2.05% 2.05% 2.05% 2.30%(d)
(0.56%) (0.33%) (0.63%) (1.10%)(d) (0.11%) (0.21%) (0.07%) (0.15%)(d)
</TABLE>
<TABLE>
<CAPTION>
TOUCHSTONE INCOME OPPORTUNITY TOUCHSTONE BOND
FUND C FUND C
- ---------------------------------- -----------------------------------
1997 1996 1995 1994(a) 1997 1996 1995(C) 1994(a)
- ------ ------ ------ ------- ------ ------ ------- -------
<C> <C> <C> <C> <C> <C> <C> <C>
$10.76 $ 9.80 $ 9.08 $10.00 $10.06 $10.53 $ 9.91 $10.00
- ------ ------ ------ ------ ------ ------ ------ ------
1.15 1.09 1.14 0.21 0.52 0.66 0.54 0.87
(0.25) 1.33 0.74 (0.94) 0.11 (0.47) 1.03 (0.85)
- ------ ------ ------ ------ ------ ------ ------ ------
0.90 2.42 1.88 (0.73) 0.63 0.19 1.57 0.02
- ------ ------ ------ ------ ------ ------ ------ ------
(1.14) (1.09) (1.16) (0.19) (0.62) (0.64) (0.90) (0.11)
(0.85) (0.37) -- -- (0.01) (0.02) (0.05) --
- ------ ------ ------ ------ ------ ------ ------ ------
(1.99) (1.46) (1.16) (0.19) (0.63) (0.66) (0.95) (0.11)
- ------ ------ ------ ------ ------ ------ ------ ------
$ 9.67 $10.76 $ 9.80 $ 9.08 $10.06 $10.06 $10.53 $ 9.91
====== ====== ====== ====== ====== ====== ====== ======
8.59% 25.88% 22.18% (7.39%) 6.37% 2.01% 16.29% 0.19%
$3,824 $2,633 $1,203 $ 926 $ 739 $ 635 $ 340 $ 22
1.94% 1.95% 1.95% 2.20%(d) 1.65% 1.65% 1.65% 1.90%(d)
10.56% 10.49% 11.70% 7.83%(d) 5.12% 5.26% 5.43% 5.12%(d)
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 14
SELECT ADVISORS TRUST C
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Select Advisors Trust C (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 on one or more series.
The Trust consists of six funds (each a "Fund"): Touchstone Emerging Growth
Fund C (the "Emerging Growth Fund"), Touchstone International Equity Fund C (the
"International Equity Fund"), Touchstone Growth & Income Fund C (the "Growth &
Income Fund"), Touchstone Balanced Fund C (the "Balanced Fund"), Touchstone
Income Opportunity Fund C (the "Income Opportunity Fund") and Touchstone Bond
Fund C (the "Bond Fund").
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>
INTERNATIONAL INCOME
EMERGING EQUITY GROWTH & BALANCED OPPORTUNITY BOND
GROWTH FUND C FUND C INCOME FUND C FUND C FUND C FUND C
------------- ------------- ------------- -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Percentage interest in
corresponding Portfolio 36.2% 45.8% 7.1% 46.0% 35.6% 4.3%
</TABLE>
As of December 31, 1997, Touchstone Advisors, Inc., a subsidiary of
Western-Southern Life Assurance Company ("Western-Southern"), and
Western-Southern owned 61.6%, 74.4%, 9.4%, 58.7%, 39.6% and 17.6% 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 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.
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.
12
<PAGE> 15
SELECT ADVISORS TRUST C
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 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. The Bond
Fund C has a capital loss carryforward expiring in December 2005 of $572.
Additionally, 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>
Balanced Fund C $ 3,090
Bond Fund C 401
Income Opportunity Fund C 107,991
International Equity Fund C 3,274
</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 distribution fee to the Distributor at an
annual rate of up to 0.75% of the Fund's average daily net assets. In addition
to the distribution fee, each fund will pay a service fee to the Distributor
equal 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
in 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 A, Select Advisors Portfolios and
Select Advisors Variable Insurance Trust, which are all included in separate
reports. For the
13
<PAGE> 16
SELECT ADVISORS TRUST C
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
year ended December 31, 1997, the Trust incurred $2,364 in Trustee fees which
were prorated to each Fund.
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 C EQUITY FUND C INCOME FUND C FUND C FUND C FUND C
------------- ------------- ------------- -------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Voluntary Expense
Limit 2.25% 2.35% 2.05% 2.10% 1.95% 1.65%
Amount of
Reimbursement $95,744 $111,655 $91,079 $96,417 $109,436 $81,769
</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 C INCOME FUND C FUND C
------------- ------------- --------
<S> <C> <C>
14% 20% 5%
</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>
EMERGING GROWTH & BALANCED INCOME
GROWTH FUND C INCOME FUND C FUND C OPPORTUNITY C
------------- ------------- -------- -------------
<S> <C> <C> <C> <C>
28% Rate gain $14,143 $14,046 $ 31,661 $78,866
20% Rate gain $77,288 $53,546 $174,583 $ 5,332
</TABLE>
Touchstone International Equity Fund paid foreign taxes of $6,410 or $0.02
per share, and the Fund recognized $64,863 or $0.18 per share of foreign source
income during the year ended December 31, 1997.
14
<PAGE> 17
SELECT ADVISORS TRUST C
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Investors and Trustees of
the Select Advisors Trust C:
We have audited the accompanying statements of assets and liabilities of
the Select Advisors Trust C (the "Trust") (consisting of Touchstone Emerging
Growth Fund C, Touchstone International Equity Fund C, Touchstone Growth and
Income Fund C, Touchstone Balanced Fund C, Touchstone Income Opportunity Fund C
and Touchstone Bond Fund C), 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 C 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
15
<PAGE> 18
(THIS PAGE INTENTIONALLY LEFT BLANK)
16
<PAGE> 19
[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> 20
EMERGING GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- ------- ----------
<S> <C> <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
----------
<CAPTION>
VALUE
SHARES (Note 1)
- ------- ----------
<S> <C> <C>
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.
18
<PAGE> 21
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
----------
<CAPTION>
VALUE
SHARES (Note 1)
- ------- ----------
<S> <C>
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
----------
<CAPTION>
VALUE
SHARES (Note 1)
- ---------- ----------
<S> <C> <C>
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.
19
<PAGE> 22
INTERNATIONAL EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- ---------- ----------
<S> <C> <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
<CAPTION>
VALUE
SHARES (Note 1)
- ---------- ----------
<C> <S> <C>
JAPAN--CONTINUED
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.
20
<PAGE> 23
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
----------
<CAPTION>
VALUE
SHARES (Note 1)
- ---------- ----------
<S> <C> <C>
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)
- --------- -----------
<S> <C> <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
-----------
<CAPTION>
VALUE
SHARES (Note 1)
- --------- -----------
<S> <C> <C>
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.
21
<PAGE> 24
GROWTH & INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE
SHARES (Note 1)
- --------- -----------
<S> <C> <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
-----------
<CAPTION>
VALUE
SHARES (Note 1)
- --------- -----------
<S> <C> <C>
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.
22
<PAGE> 25
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
----------
<CAPTION>
VALUE
SHARES (Note 1)
- --------- ----------
<S> <C> <C>
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.
23
<PAGE> 26
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
----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- --------- ----------
<S> <C> <C>
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
- --------
<S> <C> <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)
- ---------- -----------
<S> <C> <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
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<S> <C> <C>
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.
24
<PAGE> 27
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
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<C> <S> <C>
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.
25
<PAGE> 28
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
- ----------
<S> <C> <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
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<S> <C> <C>
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.
26
<PAGE> 29
BOND PORTFOLIO
SCHEDULE OF INVESTMENTS--CONTINUED
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<S> <C> <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
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (Note 1)
- ---------- -----------
<S> <C> <C>
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.
27
<PAGE> 30
(This Page Intentionally Left Blank)
28
<PAGE> 31
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
========== ========== =========== ========== =========== ===========
</TABLE>
Statements of Operations
For the year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<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.
29
<PAGE> 32
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
========== ========== ========== ==========
</TABLE>
Ratios and Supplementary Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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.
30
<PAGE> 33
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
GROWTH & INCOME BALANCED INCOME OPPORTUNITY BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------------- ----------------------- ------------------------ -------------------------
1997 1996 1997 1996 1997 1996 1997 1996
----------- ----------- ---------- ---------- ----------- ---------- ----------- -----------
<S> <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
=========== =========== ========== ========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
GROWTH & INCOME BALANCED
PORTFOLIO PORTFOLIO
- ------------------------------------ -----------------------------------
1997 1996 1995 1994(a) 1997 1996 1995 1994(a)
- -------- ------- ------ ------- ------- ------- ----- -------
<S> <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)
0.72% 0.87% 0.91% 1.11%(b) 1.99% 2.06% 2.29% 3.13%(b)
1.49% 1.34% 1.53% 1.95%(b) 3.14% 3.38% 4.39% 6.48%(b)
170% 92% 102% 10% 120% 88% 121% 7%
$0.0554 $0.0571 -- -- $0.0575 $0.0683 -- --
<CAPTION>
- ----------------------------------------------------------------------------
INCOME OPPORTUNITY BOND
PORTFOLIO PORTFOLIO
- ---------------------------------- -----------------------------------
1997 1996 1995 1994(a) 1997 1996 1995 1994(a)
- -------- ------- ------ ------- ------- ------- ----- -------
<C> <C> <C> <C> <C> <C> <C> <C>
1.30% 1.31% 1.42% 2.20%(b) 0.85% 0.85% 1.02% 1.21%(b)
11.32% 11.31% 12.53% 8.09%(b) 6.35% 6.18% 6.66% 6.32%(b)
1.92% 2.74% 4.77% 7.48%(b) 1.49% 1.32% 1.40% 1.76%(b)
270% 222% 120% 144% 88% 64% 78% 11%
-- -- -- -- -- -- -- --
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 34
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.
32
<PAGE> 35
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>
33
<PAGE> 36
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.
34
<PAGE> 37
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
35
<PAGE> 38
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
89 South Street
Boston, Massachusetts 02111
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 7077-9712
- --------------------------------------------------------------------------------
