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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Select Advisors Portfolios
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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TOUCHSTONE GROWTH & INCOME II PORTFOLIO
(a series of Select Advisors Portfolios)
311 Pike Street
Cincinnati, Ohio 45202
(800) 669-2796
NOTICE OF SPECIAL MEETING
Notice is hereby given that a Special Meeting (the "Meeting") of the
holders of beneficial interests (the "Interests") in the Growth & Income II
Portfolio (the "Portfolio"), a separate series of Select Advisors Portfolios, a
New York master trust (the "Trust"), will be held on September 18, 1997, at
11:00 a.m., Eastern Time, at the offices of the Trust, 311 Pike Street,
Cincinnati, Ohio 45202. At the Meeting, holders of Interests in the Portfolio
will be asked to consider and vote upon the following proposals:
1. To approve or disapprove the portfolio advisory agreement,
dated as of September 1, 1997, between Touchstone Advisors,
Inc. (the "Advisor") and Scudder Stevens & Clark Inc.
("Scudder"), pursuant to which agreement Scudder acts as
portfolio advisor (i.e., subadvisor) with respect to the
assets of the Portfolio, all as described in the attached
Proxy Statement.
2. To approve or disapprove a new portfolio advisory agreement
between the Advisor and Scudder (or its successor), to become
effective upon the consummation of the Transactions (as
defined in the Proxy Statement) pursuant to which Scudder will
be subject to a change in control and change its name to
Scudder Kemper Investments, Inc., all as described in the
attached Proxy Statement, pursuant to which agreement the
renamed Scudder entity will continue to act as portfolio
advisor with respect to the assets of the Portfolio.
3. To approve or disapprove an amendment to the existing
investment advisory agreement between the Trust (on behalf of
the Portfolio) and the Advisor, pursuant to which agreement
the Advisor acts as investment advisor to the Portfolio, which
would increase the fee paid by the Portfolio to the Advisor by
.05% of the first $150 million of the Portfolio's average net
assets, as described in this Proxy Statement.
4. To approve or disapprove an amendment to the Portfolio's
fundamental investment restriction relating to investments in
real estate.
Interests in the Trust are held directly by Separate Account 1 and
Separate Account 2 of Western-Southern Life Assurance Company for the benefit of
the holders of individual variable annuity contracts issued by such separate
accounts. The voting rights associated with ownership of Interests by the
separate accounts are passed through to those holders of variable annuity
contracts who have allocated a portion of their contract value to the Portfolio.
Each contract holder who had
<PAGE> 3
made such an allocation as of the close of business on August 15, 1997 is
entitled to give instructions to the affected separate account as to the manner
in which such holder's beneficial interest in the Portfolio is to be voted.
Your attention is called to the accompanying Proxy Statement.
Regardless of whether you plan to attend the Meeting, PLEASE COMPLETE, SIGN AND
RETURN PROMPTLY THE ENCLOSED PROXY CARD so that your proportionate interest in
the Portfolio may be voted in accordance with your instructions. If you are
present at the Meeting, you may change your instructions, if desired, at that
time.
By Order of the Board of Trustees of the Trust.
Andrew S. Josef
Secretary
Cincinnati, Ohio
August 29, 1997
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TOUCHSTONE GROWTH & INCOME II PORTFOLIO
(a series of Select Advisors Portfolios)
311 Pike Street
Cincinnati, Ohio 45202
(800) 669-2796
PROXY STATEMENT
This Proxy Statement is furnished by Select Advisors Portfolios (the
"Trust") to the holders of beneficial interests (the "Interests") in its Growth
& Income II Portfolio (the "Portfolio") and to the owners of variable annuity
contracts ("Contracts") issued by Separate Account 1 and Separate Account 2
("Separate Accounts" or, individually, a "Separate Account") of Western-Southern
Life Assurance Company (the "Company" or "WSLAC"), on behalf of the Trust's
Board of Trustees. This Proxy Statement is being provided to you in connection
with the Trust's solicitation of the accompanying proxy, to be voted at a
Special Meeting of holders of Interests in the Portfolio (the "Meeting") to be
held on September 18, 1997, at 11:00 a.m., Eastern Time, at the offices of the
Trust, 311 Pike Street, Cincinnati, Ohio 45202, for the purposes set forth below
and in the accompanying Notice of Special Meeting. This Proxy Statement is being
mailed on or about August 29, 1997 to holders of Interests in the Portfolio and
to those owners of Contracts who have allocated a portion of their Contract
value to the Portfolio.
At the Meeting, holders of Interests will be asked to consider and vote
upon the following proposals:
1. To approve or disapprove the portfolio advisory agreement,
dated as of September 1, 1997, between Touchstone Advisors,
Inc. (the "Advisor") and Scudder, Stevens & Clark Inc.
("Scudder"), pursuant to which agreement Scudder acts as
portfolio advisor (i.e., subadvisor) with respect to the
assets of the Portfolio all as described in the attached Proxy
Statement.
2. To approve or disapprove a new portfolio advisory agreement
between the Advisor and Scudder (or its successor), to become
effective upon the consummation of the Transactions (as
defined in the Proxy Statement) pursuant to which Scudder will
be subject to a change in control and change its name to
Scudder Kemper Investments, Inc., all as described in the
attached Proxy Statement, pursuant to which agreement Scudder
will continue to act as portfolio advisor with respect to the
assets of the Portfolio.
3. To approve or disapprove an amendment to the existing
investment advisory agreement between the Trust (on behalf of
the Portfolio) and the Advisor, pursuant to which agreement
the Advisor acts as investment advisor to the Portfolio, which
would increase the fee paid by the Portfolio to the Advisor by
.05% of the Portfolio's average net assets on the first $150
million of the Portfolios net assets, as described in this
Proxy Statement.
<PAGE> 5
4. To approve or disapprove an amendment to the Portfolio's
fundamental investment restriction relating to investments in
real estate.
CERTAIN VOTING MATTERS
Interests in the Portfolio are owned only by the Separate Accounts, by
the Company`s Separate Account A, which holds and invests the assets of The
Western & Southern Life Insurance Company Pension Plan (the "Pension Plan"), and
by certain other affiliates of the Company (the "Affiliates") that provided
initial capital for the organization of the Trust and the Portfolio.
The voting rights accompanying ownership of the Interests in the
Portfolio are legally vested only in the Separate Accounts, Separate Account A
and the Affiliates. As a matter of policy, however, owners of the Contracts
issued by the Separate Accounts (the "Contract Owners") have the right to
instruct the Separate Accounts as to the manner in which their proportionate
Interests in the Portfolio will be voted on any matter on which holders of
Interests are entitled to vote. If voting instructions are not received from a
Contract Owner, the Separate Accounts will vote the Interest attributable to
such Contract Owner in the same proportion as the Interests for which voting
instructions have been received from other Contract Owners. As of the close of
business on August 15, 1997, the record date for determining holders of
Interests and those Contract Owners entitled to vote or give voting instructions
on the matters to be brought before the Meeting (the "Record Date"), __________%
of the Interests outstanding were beneficially owned by Contract Owners. The
remaining Interests were held by Separate Account A (____%) and the Affiliates
(____%). Because the Company has determined that the proposals to be voted on at
the meeting are in the best interests of its employees who participate in the
Pension Plan, it intends to vote all of the Interests held by Separate Account A
in favor of such proposals. Interests held by the Affiliates will be voted in
the same proportion as those interests for which voting instructions have been
received from the Contract Owners.
The persons named in the accompanying proxy will vote in accordance
with instructions given in the proxy, but in the absence of voting directions,
the Interests represented by any proxy that is signed and returned will be voted
FOR the proposals. With respect to any other matters (none of which are now
known to the Trust's Board of Trustees) that may be presented at the Meeting,
the Interests represented by the proxy instructions received will be voted in
the discretion of the persons appointed as proxies.
A Contract Owner may revoke the accompanying proxy at any time prior to
its use by filing with the Secretary of the Trust a written revocation or a duly
executed proxy bearing a later date. The proxy will not be voted if the Contract
Owner is present at the Meeting and elects to vote in person. Attendance at the
Meeting will not, by itself, serve to revoke the proxy.
If a Contract Owner abstains, the Interest represented will be counted
as present and entitled to vote on the matter for purposes of determining a
quorum at the Meeting, but the abstention will have the effect of a negative
vote on the proposals.
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The principal solicitation of proxies will be by mail, but proxies may
also be solicited by telephone, telegraph and personal contact by Trustees,
officers and regular employees of the Trust. All costs associated with the
preparation, filing and distribution of this Proxy Statement, the solicitation
and the Meeting will be borne by the Advisor and not by Separate Account 1,
Separate Account 2, Separate Account A, the Trust, the Portfolio or Scudder.
PROPOSAL 1
CURRENT PORTFOLIO SUB-ADVISORY AGREEMENT
BACKGROUND
As discussed in each Separate Account's Prospectus, each Separate
Account is divided into seven sub-accounts ("Sub-Accounts" or, individually, a
"Sub-Account"). Two of these Sub-Accounts in each Separate Account (Growth &
Income and Bond) invest all of their respective investable assets in portfolios
of the Trust and, as a result, are part of a two-tier, master/feeder structure,
referred to as a Hub and Spoke(R) structure.1 As spokes in a Hub and Spoke
structure, each of the Growth & Income Sub-Accounts seeks to achieve its
investment objective by investing all of its investable assets in the Portfolio.
The Portfolio is a separate series of the Trust, which is a New York
master trust registered as an open-end diversified management investment
company. The Advisor serves as the Trust's investment advisor and sponsor. The
address of the Advisor is 311 Pike Street, Cincinnati, Ohio 45202. The Advisor,
in its capacity as the Trust's investment advisor, has engaged a number of
portfolio advisors (i.e., subadvisors) to manage the separate portfolios of the
Trust.
At a meeting held on August 15, 1997, the Board of Trustees of the
Trust voted to replace the Portfolio's prior subadvisor and approved the
Advisor's selection of Scudder as portfolio advisor to the Portfolio. A new
portfolio advisory agreement with Scudder becomes effective as of September 1,
1997 (the "Current Portfolio Advisory Agreement"). Except as described herein,
the terms of the Current Portfolio Advisory Agreement are substantially similar
to the terms of the portfolio advisory agreement that had been in effect prior
to September 1, 1997.
As a result of the requirements of the Investment Company Act of 1940,
as amended (the "1940 Act"), approval by holders of the Interests is required to
continue the Current Portfolio Advisory Agreement with Scudder for a period of
more than 120 days from its effective date.
At the Meeting, holders of Interests are being asked to approve the
Current Portfolio Advisory Agreement between the Advisor and Scudder. Except for
the fee arrangement, the
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1 Hub and Spoke(R) is a registered service mark of Signature Financial
Group, Inc. ("Signature"). The terms "Hub(sm)" and "Spoke(sm)" are service
marks of Signature.
3
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addition of provisions regarding Scudder's possible use of an affiliated
broker-dealer to execute transactions on behalf of the Portfolio (the
"affiliated brokerage provisions"), and the other differences noted under
"Current Portfolio Advisory Agreement," below, the Current Portfolio Advisory
Agreement is identical in all material respects to the portfolio advisory
agreement dated September 9, 1994, that had been in effect between the Advisor
and Fort Washington Investment Advisors, Inc. ("Fort Washington"), an affiliate
of the Company, until August 31, 1997 (the "Prior Portfolio Advisory
Agreement"). A copy of the Current Portfolio Advisory Agreement is set forth in
Exhibit A to this Proxy Statement.
Under the investment advisory agreement between the Trust (on behalf of
the Portfolio) and the Advisor, the Advisor at its expense may select, subject
to the review and approval of the Trust's Board of Trustees, a portfolio advisor
or portfolio advisors to manage the investments of the Portfolio. For
information regarding Scudder that the Board of Trustees considered in making
this selection, see "Information about Scudder."
PRIOR PORTFOLIO ADVISORY AGREEMENT
Fort Washington, an affiliate of the Company, served as portfolio
advisor for the assets of the Portfolio under the Prior Portfolio Advisory
Agreement. The Prior Portfolio Advisory Agreement was approved by the
shareholders of the Trust on September 1, 1994 and was last approved by the
Trust's Trustees, including the Trustees who were not "interested persons," on
December 19, 1996. Fort Washington resigned as portfolio advisor to the
Portfolio, and the Prior Portfolio Advisory Agreement was terminated by the
parties, effective as of the close of business on August 31, 1997.
Under the Prior Portfolio Advisory Agreement, Fort Washington received
from the Advisor an annual fee for its services equal to .45% of the average
daily net assets of the Portfolio. At December 31, 1996, net assets of the
Portfolio were $21,970,960. For the fiscal year ended December 31, 1996, the
Advisor paid fees of $76,797 to Fort Washington for its services under the
Prior Portfolio Advisory Agreement.
CURRENT PORTFOLIO ADVISORY AGREEMENT
The Current Portfolio Advisory Agreement was approved by the Trust's
Trustees, including the Trustees who were not "interested persons," on August
15, 1997. The terms of the Current Portfolio Advisory Agreement are
substantially identical to those of the Prior Portfolio Advisory Agreement,
except as follows: (1) The Current Portfolio Advisory Agreement has a different
fee arrangement; (2) the Current Portfolio Advisory Agreement contains the
affiliated brokerage provisions described below; (3) the Prior Portfolio
Advisory Agreement provided for the Advisor to indemnify Fort Washington under
certain circumstances, while the Current Portfolio Advisory Agreement has no
such indemnification clause; and (4) the Current Portfolio Advisory Agreement
states that Scudder may pay a broker-dealer who provides research services to
the Portfolio a commission for effecting a portfolio transaction higher than the
commission another broker or dealer would have charged if, in addition to the
satisfaction of other conditions, the Portfolio
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derives or will derive a significant benefit from such research services (a
"significant benefit clause"). The Prior Portfolio Advisory Agreement did not
contain a significant benefit clause. The description of the Current Portfolio
Advisory Agreement set forth in this Proxy Statement is qualified in its
entirety by reference to Exhibit A.
Under the Current Portfolio Advisory Agreement, Scudder manages the
investment and reinvestment of the assets of the Portfolio, subject to and in
accordance with the investment objectives, policies and restrictions of the
Portfolio and any directions which the Advisor or the Trust's Board of Trustees
may give from time to time with respect to the Portfolio. In this regard,
Scudder will make all determinations with respect to the investment of the
Portfolio's assets and the purchase and sale of portfolio securities. In
addition, Scudder will determine the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining to the Portfolio's
securities will be exercised. Scudder will render regular reports to the Trust's
Board of Trustees, to the Advisor and to any advisor(s) that the Advisor engages
to assist it in evaluating Scudder's performance and activities.
The Current Portfolio Advisory Agreement states that Scudder's primary
objective when placing orders with brokers and dealers will be to obtain the
most favorable price and execution available for the Portfolio. In placing such
orders Scudder may consider a number of factors, including, without limitation,
the overall direct net economic result to the Portfolio (including commissions,
which may not be the lowest available but ordinarily should not be higher than
the generally prevailing competitive rate), the financial strength and
stability of the broker, the efficiency with which the transaction will be
effected, the ability to effect the transaction at all where a large block is
involved, and the availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. Scudder is specifically
authorized, to the extent authorized by law, to pay a broker or dealer who
provides research services to Scudder an amount of commission for effecting a
portfolio transaction in excess of the amount of commission another broker or
dealer would have charged for effecting such transaction, in recognition of such
additional research services rendered by the broker or dealer. However, such
payment is permissible only if Scudder determines in good faith that the excess
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer and that the Portfolio derives or
will derive a reasonably significant benefit from such research services.
The affiliated brokerage provisions in the Current Portfolio Advisory
Agreement permit Scudder to place brokerage transactions with broker-dealers
affiliated with Scudder ("Affiliated Brokers"). However, the Current Portfolio
Advisory Agreement provides that Scudder may effect securities transactions for
the Portfolio only if (1) the commissions, fees or other remuneration received
or to be received by it are reasonable and fair compared to the commissions,
fees or other remuneration received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time, and (2) the Trustees
of the Trust, including a majority of those Trustees who are not interested
persons of the Trust, have adopted procedures pursuant to Rule 17e-1 under the
1940 Act for determining the permissible level of such commissions. Each Board
of Trustees has previously adopted such procedures. Therefore, Scudder's use of
Affiliated Brokers to execute transactions on
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behalf of the Portfolio should not result in an increase in brokerage
commissions paid by the Portfolio.
The Current Portfolio Advisory Agreement will, assuming it is approved
by the holders of Interests in the Portfolio pursuant to this Proxy Statement,
continue in effect until December 31, 1998, and it will continue thereafter
provided that such continuance is specifically approved by the Advisor and
Scudder and, in addition, at least annually by (1) the vote of the holders of a
majority of the outstanding voting securities of the Portfolio or by vote of a
majority of the Trust's Board of Trustees and (2) by the vote of a majority of
the Trustees of the Trust who are not parties to the Current Portfolio Advisory
Agreement or interested persons of either the Advisor or Scudder, cast in person
at a meeting called for the purpose of voting on such approval.
The Current Portfolio Advisory Agreement may be terminated at any time,
without payment of any penalty (1) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting securities of
the Portfolio, in any such case upon at least 60 days' prior written notice to
Scudder, and (2) by Scudder upon at least 60 days' prior written notice to the
Advisor and the Trust. The Current Portfolio Advisory Agreement will also
terminate upon written notice by one party to the other party that the other
party is in material breach of the agreement, unless the other party in material
breach of the agreement cures such breach to the reasonable satisfaction of the
party alleging the breach within 30 days after the written notice. The Current
Portfolio Advisory Agreement terminates automatically in the event of its
assignment. As a result of the requirements of the 1940 Act, the Current
Portfolio Advisory Agreement will terminate automatically 120 days from its
effective date unless the Agreement is approved by holders of Interests prior to
such date.
The Current Portfolio Advisory Agreement provides that, absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties under the Current Portfolio Advisory Agreement on the part
of Scudder, Scudder will not be subject to liability to the Advisor, the Trust
or to any holder of an interest in the Portfolio for any act or omission in the
course of, or connected with, rendering services under the Current Portfolio
Advisory Agreement or for any losses that may be sustained in the purchase,
holding or sale of any security.
The Advisor pays the fees earned by Scudder with respect to its
management of the Portfolio's assets. As compensation for its services, Scudder
will be paid a monthly fee equal on an annual basis to 0.50% of the first $150
million of the combined average daily net assets of the Portfolio and another
similar portfolio within the Trust (which is also managed by Scudder for the
Advisor), and .45% of the combined average daily net assets of the Portfolio and
such other similar portfolio in excess of $150 million. This represents an
increase of .05% to be paid on the first $150 million of the combined average
daily net assets of the Portfolio and such similar portfolio over the fee paid
under the Prior Portfolio Advisory Agreement.
INFORMATION ABOUT SCUDDER
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Scudder is one of the most experienced investment counsel firms in the
United States. It was established in 1919 as a partnership and was restructured
as a Delaware corporation in 1985. The principal source of Scudder's income is
professional fees received from providing continuing investment advice. Scudder
provides investment counsel for many individuals and institutions, including
insurance companies, endowments, industrial corporations and financial and
banking organizations.
Daniel Pierce* is the chairman of the Board of Scudder, Edmond D.
Villani# is President and Chief Executive Officer of Scudder, Stephen R.
Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, E. Michael Brown*, Mark S.
Casady*, Linda C. Coughlin*, Margaret D. Hadzima*, Jerard K. Hartman#, Richard
A. Holt@, John T. Packard+, Kathryn L. Quirk#, Cornelia M. Small# and Stephen A.
Wohler* are the other members of the Board of Directors of Scudder (see footnote
for symbol key showing each person's address). The principal occupation of each
of the above named individuals is serving as a Managing Director of Scudder.
All of the outstanding voting and nonvoting securities of Scudder are
held of record by Stephen R. Beckwith, Juris Padegs#, Daniel Pierce, and Edmond
D. Villani in their capacity as the representatives of the beneficial owners of
such securities (the "Representatives"), pursuant to a Security Holders'
Agreement among Scudder, the beneficial owners of securities of Scudder and such
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocations will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock
and all Principals of Scudder own nonvoting stock.
The Portfolio will be managed by a team of Scudder investment
professionals. They are supported by Scudder's large staff of economists,
research analysts, traders and other investment specialists who work in
Scudder's offices across the United States and abroad. Scudder believes its team
approach benefits investors by bringing together many disciplines and leveraging
Scudder's extensive resources.
PORTFOLIO MANAGEMENT
Lead Product Manager, Robert T. Hoffman leads a team of investment
professionals responsible for the management of the Portfolio and other
portfolios managed in a similar fashion. Mr. Hoffman is responsible for setting
the Portfolio's stock investing strategy and overseeing the Portfolio's
day-to-day operations. Mr. Hoffman, who joined Scudder in 1990 as a portfolio
manager, has 13 years of experience in the investment industry, including
several years of pension fund management experience.
- ----------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
+ 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois
7
<PAGE> 11
Lori Ensinger, Lead Portfolio Manager joined the portfolio management
team in 1993. Ms. Ensinger focuses on stock selection and investment strategy.
She has worked as a portfolio manager since 1983, and joined Scudder in 1993.
Deborah Chaplin, Portfolio Manager, has focused on stock selection and
investment strategy since joining the portfolio management team in 1997. Ms.
Chaplin, who joined Scudder in 1996 has over four years of experience as a
securities analyst and portfolio manager. Prior to joining Scudder, Ms. Chaplin
was a research fellow in the Faculty of Letters at Kyoto University, Japan.
Benjamin W. Thorndike, Portfolio Manager, is the Portfolio's chief
analyst and strategist for convertible securities. Mr. Thorndike, who has 18
years of investment experience, joined Scudder in 1983 as a portfolio manager.
Kathleen T. Millard, Portfolio Manager, has been involved in the
investment industry since 1983 and has worked as a portfolio manager since 1986.
Ms. Millard, who joined the portfolio management team and Scudder in 1991,
focuses on strategy and stock selection.
Please refer to Exhibit B to this Proxy Statement, which identifies all
investment companies which have investment objectives similar to those of the
Portfolio and for which Scudder acts as investment sub-advisor or advisor.
Exhibit B also discloses the fees charged such investment companies by Scudder,
and the size of each such investment company.
TRUSTEES' CONSIDERATION
In considering the Current Portfolio Advisory Agreement, the Trust's
Board of Trustees considered a number of factors, including the nature, quality
and extent of the services furnished by Scudder; Scudder's experience in
investing; possible economies of scale; Scudder's investment record; comparative
data as to investment performance, advisory fees and other fees, including
administrative fees, and expense ratios, particularly fee and expense ratios of
funds similar to the Portfolio, and other investment advisers; the risks assumed
by Scudder; the advantages and possible disadvantages to the Portfolio of having
an adviser which also serves other investment companies as well as other
accounts; possible benefits to Scudder from serving as subadvisor to the
Portfolio; Scudder's financial resources and the continuance of appropriate
incentives to assure that Scudder will continue to furnish high quality services
to the Portfolio; and various other factors.
The Board of Trustees of the Trust believes that the terms of the
Current Portfolio Advisory Agreement are fair to, and in the best interest of,
the Portfolio, the Trust, and the holders of Interests in the Portfolio. The
Trust's Board of Trustees, including the independent Trustees of Trust voting
separately, recommends that holders of Interests in the Portfolio approve the
Current Portfolio Advisory Agreement between Scudder and the Advisor. In making
this recommendation, the Trustees considered the nature and quality of the
proposed services to be provided by Scudder to the Portfolio, Scudder's past
performance record with respect to growth & income accounts, the
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scope of Scudder's portfolio management activities, Scudder's investment
philosophy and process, and the quality of Scudder's capabilities generally. The
Trustees also examined the background and experience of Scudder's various
officers and managers, especially those who would have direct involvement in the
Portfolio's management. Fees charged by entities providing services comparable
to those of Scudder were also considered.
After a comprehensive review of the matter, the Board of Trustees of
the Trust concluded that the Portfolio should receive investment advisory
services under the Current Portfolio Advisory Agreement equal or superior to
those it had received under the Prior Portfolio Advisory Agreements.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT INTEREST HOLDERS VOTE IN FAVOR OF
THE PROPOSAL.
PROPOSAL 2
NEW PORTFOLIO SUB-ADVISORY AGREEMENT
On June 26, 1997, Scudder entered into a Transaction Agreement
(the "Transaction Agreement") with Zurich Insurance Company ("Zurich"). Under
the terms of the Transaction Agreement, Zurich will acquire a majority interest
in Scudder, and Zurich Kemper Investments, Inc. ("ZKI"), a Zurich subsidiary,
will become part of Scudder. Scudder's name will be changed to Scudder Kemper
Investments, Inc. ("Scudder Kemper"). The foregoing are referred to as the
"Transactions." ZKI, a Chicago-based investment adviser and the adviser to the
Kemper funds, has approximately $80 billion under management. The headquarters
of Scudder Kemper will be in New York. Edmond D. Villani, Scudder's CEO, will
continue as CEO of Scudder Kemper and will become a member of Zurich's Corporate
Executive Board.
As required by the 1940 Act, the Current Portfolio Advisory Agreement
provides for its automatic termination upon its "assignment." The 1940 Act
defines "assignment" to include any direct or indirect transfer of a controlling
block of the assignor's outstanding voting securities by a security holder of
the assignor. If the Transaction is consummated, it will give rise to an
"assignment" of the Current Portfolio Advisory Agreement and thus its
termination.
If the Transaction is consummated and the Current Portfolio Advisory
Agreement is terminated as a result, the Advisor and Scudder intend to enter
into a new portfolio advisory agreement (the "New Portfolio Advisory Agreement).
The New Portfolio Advisory Agreement will not change any of the terms of the
Current Portfolio Advisory Agreement that will then be in effect, except for the
effective date and the change to Scudder's name.
At a meeting held on August 15, 1997, the Board of Trustees of the
Trust voted to approved the Advisor's selection of Scudder Kemper as portfolio
advisor to the Portfolio subsequent to the Transactions and approved the New
Portfolio Advisory Agreement. To avoid the expense of another proxy solicitation
and meeting of holders of Interests in the Portfolio, the
9
<PAGE> 13
holders of Interests in the Portfolio are being asked to approve the New
Portfolio Advisory Agreement at this time. Thus, upon consummation of the
Transaction and approval of the New Portfolio Advisory Agreement by the Trust's
Board of Trustees, the New Portfolio Advisory Agreement will become effective
without any additional vote of the holders of Interests in the Portfolio.
IF THE NEW PORTFOLIO ADVISORY AGREEMENT WITH SCUDDER KEMPER IS NOT
APPROVED BY HOLDERS OF INTERESTS IN THE PORTFOLIO, THE CURRENT PORTFOLIO
ADVISORY AGREEMENT WOULD TERMINATE UPON THE CLOSING OF THE TRANSACTIONS AND
SCUDDER WOULD CEASE TO ACT AS PORTFOLIO ADVISOR TO THE PORTFOLIO. In such event,
the Board of Trustees of the Trust would make such arrangements for the
management of the Portfolio's investments as it deemed appropriate and in the
best interests of holders of Interests in the Portfolio.
INFORMATION CONCERNING THE TRANSACTIONS AND ZURICH
Under the Transaction Agreement, Zurich will pay $866.7 million in cash
to acquire two-thirds of Scudder's outstanding shares and will contribute ZKI
(with an indicated value of $775 million) to Scudder for additional shares,
following which Zurich will have a 79.1% fully diluted equity interest in the
combined business. Zurich will then transfer a 9.6% fully diluted equity
interest in Scudder Kemper (with an indicated value of $200 million) to a
compensation pool for the benefit of Scudder and ZKI employees, as well as $13
million in cash and $50 million of warrants on Zurich shares for award to
Scudder employees, in each case subject to five-year vesting schedules. After
giving effect to the Transactions, current Scudder shareholders will have a
29.6% fully diluted equity interest in Scudder Kemper and Zurich will have a
69.5% fully diluted interest in Scudder Kemper.
The purchase price for Scudder or for ZKI in the Transactions is
subject to adjustment based on the impact to revenues of non-consenting clients,
and will be reduced if the annualized investment management fee revenues
(excluding the effect of market changes, but taking into account new assets
under management) from clients at the time of closing, as a percentage of
revenue run rates as of June 26, 1997 (the "Revenue Run Rate Percentage"), is
less than 90%.
At the closing, Zurich and the other shareholders of Scudder Kemper
will enter into a Second Amended and Restated Holders Agreement (the "New SHA").
Under the New SHA, Scudder shareholders will be entitled to designate three of
the seven members of the Scudder Kemper board and two of the four members of an
Executive Committee, which will be the primary management-level committee of
Scudder Kemper. Zurich will be entitled to designate the other four members of
the Scudder Kemper board and the other two members of the Executive Committee.
The names, addresses and principal occupations of the initial
Scudder-designated directors of Scudder Kemper are as follows: Lynn S. Birdsong,
345 Park Avenue, New York, New York, Managing Director of Scudder; Cornelia M.
Small, 345 Park Avenue, New York,
10
<PAGE> 14
New York, Managing Director of Scudder; and Edmond D. Villani, 345 Park Avenue,
New York, New York, President and Chief Executive Officer of Scudder.
The names, addresses and principal occupations of the initial
Zurich-designated directors of Scudder Kemper are as follows: Lawrence W. Cheng,
Mythenquai 2, Zurich, Switzerland, Chief Investment Officer for Investments and
Institutional Asset Management and the Corporate functions of Securities and
Real Estate for Zurich; Steven M. Gluckstern, Mythenquai 2, Zurich, Switzerland,
responsible for Reinsurance, Structured Finance, Capital Market Products and
Strategic Investments, and a member of the Corporate Executive Board of Zurich;
Rolf Hueppi, Mythenquai 2, Zurich, Switzerland, Chairman of the Board and Chief
Executive Officer of Zurich; and Markus Rohrbasser, Mythenquai 2, Zurich,
Switzerland, Chief Financial Officer and member of the Corporate Executive Board
of Zurich.
The initial Scudder-designated Executive Committee members will be
Messrs. Birdsong and Villani (Chairman). The initial Zurich-designated Executive
Committee members will be Messrs. Cheng and Rohrbasser.
The New SHA requires the approval of a majority of the Scudder-based
directors for certain decisions, including changing the name of Scudder Kemper,
effecting an initial public offering before April 15, 2005, causing Scudder
Kemper to engage substantially in non-investment management and related
businesses, making material acquisitions or divestitures, making material
changes in Scudder Kemper's capital structure, dissolving or liquidating Scudder
Kemper, or entering into certain affiliate transactions with Zurich. The New SHA
also provides for various put and call rights with respect to Scudder Kemper
stock held by current Scudder employees, limitations on Zurich's ability to
purchase other asset management companies outside of Scudder Kemper, rights of
Zurich to repurchase Scudder Kemper stock upon termination of employment of
Scudder Kemper personnel, and registration rights for continuing Scudder
shareholders.
The Transactions are subject to a number of conditions, including
approval by Scudder shareholders; the Revenue Run Rate Percentages of Scudder
and ZKI being at least 75%; Scudder and ZKI having obtained director and
shareholder approvals from registered funds representing 90% of assets of such
funds under management as of June 30, 1997; the absence of any restraining order
or injunction preventing the Transactions, or any litigation challenging the
Transactions that is reasonably likely to result in an injunction or
invalidation of the Transactions; and the continued accuracy of the
representations and warranties contained in the Transaction Agreement. The
Transactions are expected to close during the fourth quarter of 1997.
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office is located at
Mythenquai 2, 8002 Zurich, Switzerland. Historically, Zurich's earnings have
resulted from its operations as an insurer as well as from its ownership of its
subsidiaries and affiliated companies (the "Zurich Insurance Group"). Zurich and
the Zurich Insurance Group provide an extensive range of insurance products and
services,
11
<PAGE> 15
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich Insurance Group is particularly strong in the insurance of
international companies and organizations. Over the past few years, Zurich's
global presence, particularly in the United States, has been strengthened by
means of selective acquisitions.
BOARD OF TRUSTEES EVALUATION
Scudder has informed the Trustees that the Transactions are not
expected to have a material effect on the operations of the Portfolio or on the
holders of Interests in the Portfolio. No material change in Scudder's
investment philosophy, policies or strategies is currently envisioned. Neither
the Transaction Agreement nor the New SHA, by its terms, contemplates any
changes, other than changes in the ordinary course of business, in the
management or operation of Scudder relating to the Portfolio, the personnel
managing the Portfolio or other services provided to and business activities of
the Portfolio. The Transactions also are not expected to result in material
changes in the senior management or personnel of Scudder. Certain senior
executives of Scudder, including Mr. Villani, have entered into employment
agreements, effective as of the closing of the Transactions, with terms ranging
from three to five years. Based on the foregoing, Scudder does not anticipate
that the Transactions will cause a reduction in the quality of services
provided to the Portfolio, or have any adverse effect on Scudder's ability to
fulfill its obligations under the New Portfolio Advisory Agreement or on its
ability to operate its businesses in a manner consistent with its current
practices.
12
<PAGE> 16
TRUSTEES' CONSIDERATION
In addition to the factors that the Board of the Trust considered in
evaluating the Transactions and their effect on the Portfolio, which included
(i) that there were no contemplated changes in senior management or personnel
of Scudder, in the investment philosophy, policies or strategy of the Portfolio
as a result of the Transactions, or in the quality of services provided to
the Portfolio by Scudder and (ii) the undertaking that no unfair burden would
be imposed upon the Portfolio as a result of the Transactions, the Board also
took into account that the New Portfolio Advisory Agreement, including the
terms relating to the services to be provided, and the fees and expenses
payable, thereunder, is on the same terms in all material respects as the
Current Portfolio Advisory Agreement. The Board noted that, in approving the
Current Portfolio Advisory Agreement, the Board of the Trust, including the
independent Trustees, had considered a number of factors, including the nature,
quality and extent of the services furnished by Scudder; the necessity of
Scudder maintaining and enhancing its ability to retain and attract capable
personnel; Scudder's experience in investing; possible economies of scale;
Scudder's investment record; comparative data as to investment performance,
advisory fees and other fees, including administrative fees, and expense
ratios, particularly fee and expense ratios of funds similar to the Portfolio,
and other investment advisers; the risks assumed by Scudder; the advantages and
possible disadvantages to the Portfolio of having an adviser which also serves
other investment companies as well as other accounts; possible benefits to
Scudder from serving as subadvisor to the Portfolio; Scudder's financial
resources and the continuance of appropriate incentives to assure that Scudder
will continue to furnish high quality services to the Portfolio; and various
other factors.
The Board of Trustees of the Trust believes that the terms of the New
Portfolio Advisory Agreement are fair to, and in the best interest of, the
Portfolio, the Trust, and the holders of Interests in the Portfolio. The Trust's
Board of Trustees, including the independent Trustees of the Trust voting
separately, recommends that holders of Interests in the Portfolio approve the
New Portfolio Advisory Agreement between Scudder Kemper and the Advisor. In
making this recommendation, the Trustees considered the nature and quality of
the proposed services to be provided by Scudder Kemper to the Portfolio,
Scudder's past performance record with respect to growth & income accounts, the
scope of Scudder's portfolio management activities, Scudder's investment
philosophy and process, and the quality of Scudder's capabilities generally. The
Trustees also examined the background and experience of Scudder's various
officers and managers, especially those who would have direct involvement in the
Portfolio's management. Fees charged by entities providing services comparable
to those of Scudder were also considered.
After a comprehensive review of the matter, the Board of Trustees of
the Trust concluded that the Portfolio should receive investment advisory
services under the New Portfolio Advisory
13
<PAGE> 17
Agreement equal or superior to those it had received under the Prior Portfolio
Advisory Agreement.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT HOLDERS OF INTERESTS IN THE
PORTFOLIO VOTE IN FAVOR OF THE PROPOSAL.
PROPOSAL 3
AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
BACKGROUND
At the Meeting, holders of Interests in the Portfolio are being asked
to approve an amendment (the "Amendment") to the investment advisory agreement
(the "Investment Advisory Agreement"), dated September 9, 1994 between the
Trust, on behalf of the Portfolios, and the Advisor. The Amendment makes no
change to the Investment Advisory Agreement except to increase the fee paid to
the Advisor by the Trust, on behalf of the Portfolio. Since the Growth & Income
sub-accounts of Separate Accounts 1 and 2 are holders of Interests in the
Portfolio, the Contract Owners who have allocated contract value to such
sub-accounts would ultimately bear the expense of the increased fee. However, a
"cap" has been placed on the Trust's expenses by the Advisor (currently
effective through March 31, 1998). Unless the expense cap is removed or unless
the Portfolio's aggregate operating expenses are less than the expense cap for a
given fiscal year, the impact of the proposed increase in advisory fees is
eliminated with respect to the holders of Interests in the Portfolio. (See
footnote 1 set forth under the caption "The Amendment," below, for further
information regarding the expense cap.) A copy of the proposed Amended and
Restated Investment Advisory Agreement is set forth in Exhibit C to this Proxy
Statement.
THE INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement was approved by the initial investors
in the Portfolio on September 1, 1994, and was last approved by the Trust's
Board of Trustees, including the Trustees who were not "interested persons," on
December 19, 1996. Under the Investment Advisory Agreement, the Advisor manages
the investment and reinvestment of the Portfolio's assets. In fulfilling this
obligation, the Advisor may engage separate portfolio advisors, such as Scudder,
to make all determinations with respect to the investment of the Portfolio's
assets, and to effect the purchase and sale of portfolio securities. The
Investment Advisory Agreement provides that services by a portfolio advisor will
also include determining the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the portfolio securities
will be exercised. Under the Investment Advisory Agreement, the Advisor causes
each portfolio advisor to render regular reports to the Trust's Board of
Trustees.
The Investment Advisory Agreement continues in effect until December
31, 1997, and it will continue thereafter provided that such continuance is
specifically approved by the Trust and the Advisor and, in addition, at least
annually by (1) the vote of holders of a majority of the outstanding
14
<PAGE> 18
voting securities of the Portfolio or by vote of a majority of the Trust's Board
of Trustees, and (2) by the vote of a majority of the Trustees of the Trust who
are not parties to the Investment Advisory Agreement or interested persons of
the Advisor, cast in person at a meeting called for the purpose of voting on
such approval.
The Investment Advisory Agreement may be terminated at any time, with
respect to the Portfolio, without payment of any penalty, (1) by the Trust's
Board of Trustees or by a vote of the majority of the outstanding voting
securities of the Portfolio upon 60 days' prior written notice to the Advisor
and (2) by the Advisor upon 60 days' prior written notice to the Trust.
The Investment Advisory Agreement provides that, absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties under the Investment Advisory Agreement on the part of the Advisor,
the Advisor will not be subject to liability to the Trust or to any holder of an
interest in the Portfolio for any act or omission in the course of, or connected
with, rendering services under the Investment Advisory Agreement or for any
losses that may be sustained in the purchase, holding or sale of any security.
Under certain circumstances, the Trust will indemnify the Advisor against
losses, claims, damages, liabilities or expenses resulting from acts or
omissions of the Trust.
The Investment Advisory Agreement currently states that the Trust pays
to the Advisor, as compensation for its services as investment advisor, a fee
that is equal on an annual basis to 0.75% of the average daily net assets of the
Portfolio.
THE AMENDMENT
The Amendment was approved by the Trust's Board of Trustees, including
the Trustees who were not "interested persons," on August 15, 1997. The
Amendment proposes only to increase the fee paid by the Trust, on behalf of the
Portfolio, to the Advisor. If adopted, the Amendment would increase the fee on
an annual basis from 0.75% of the average daily net assets of the Portfolio to
0.80% of the first $150 million of average daily net assets of the Portfolio.
The fee on average daily net assets of the Portfolio in excess of $150 million
will remain 0.75% of such assets. The Amendment would not change the Investment
Advisory Agreement in any other respect.
--------------------------
For the fiscal year ended December 31, 1996, the following table
provides the aggregate operating expenses of the Portfolio expressed as a
percentage of average daily net assets of the Portfolio. The table considers
both the current advisory fee paid to the Advisor and the proposed increased
advisory fee. The table does not include separate account expenses, such as
deferred sales charges and variable account expenses, because such charges are
assessed at the separate account level and do not affect the Portfolio.
15
<PAGE> 19
ANNUAL PORTFOLIO OPERATING EXPENSES
<TABLE>
<CAPTION>
CURRENT FEES PROPOSED FEES
------------ -------------
FIRST $150 MILLION OF AVERAGE DAILY NET ASSETS
ALL ASSETS AVERAGE DAILY NET ASSETS IN EXCESS OF $150 MILLION
---------- ------------------------ -------------------------
<S> <C> <C> <C>
Advisors Fee 0.75% 0.80% 0.75%
Other Expenses(1) 0.10% 0.05% 0.10%
(after waiver and
reimbursement)
Total Operating 0.85% 0.85% 0.85%
Expenses(1)
(after waiver and
reimbursement)
- -----------------
<FN>
(1) The "Total Operating Expenses" charged to the Portfolio will not exceed the
percentages listed above. The Advisor, in its capacity as sponsor of the Trust,
has agreed to waive or reimburse certain of the Operating Expenses of the
Portfolio and each other portfolio of the Trust (as used herein, "Operating
Expenses" includes amortization of organizational expenses but is exclusive of
interest, taxes, brokerage commissions and other portfolio transaction expenses,
capital expenditures and extraordinary expenses) such that, after such waivers
or reimbursements, the aggregate Operating Expenses of the Portfolio will not
exceed on an annual basis the "Total Operating Expenses" listed above (the
"Expense Caps"). An Expense Cap may be terminated with respect to any Portfolio
by the Advisor, in its capacity as sponsor, as of the end of any calendar
quarter after December 31, 1997, by giving at least 30 days prior written
notice, and the sponsor agreement will terminate with respect to the Trust if
the Advisor (or an affiliate that has assumed such obligations) ceases to be the
sponsor or the Advisor of the Trust. For the year ended December 31, 1996,
without the Expense Caps and assuming CURRENT fees, "Other Expenses" and "Total
Operating Expenses" would have been 0.96% and 1.71%, respectively for the
Portfolio. For the year ended December 31, 1996, without the Expense Caps and
assuming PROPOSED fees, "Other Expenses" and "Total Operating Expenses" would
have been 0.96% and 1.76%, respectively for the Portfolio.
</TABLE>
-----------------
Based on expenses incurred for the year ended December 31, 1996, a
Contract Owner would pay the expenses set forth in the table below on a $1,000
investment in the Portfolio (including for this purpose all Portfolio and
Separate Account expenses) assuming (1) a 5% annual return, (2) the total
operating expense ratio set forth in the immediately preceding chart, and (3)
redemption at the end of each time period. The table considers both the current
advisory fee paid to the Advisor and the proposed increased advisory fee.
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<PAGE> 20
CURRENT FEES PROPOSED FEES
------------ -------------
1 Year $ 94 $ 94
3 Years $128 $128
5 Years $162 $162
10 Years $270 $270
INFORMATION ABOUT THE ADVISOR
The Advisor is a wholly-owned subsidiary of IFS Financial Services,
Inc., which is a wholly-owned subsidiary of Western-Southern Life Assurance
Company, located at 400 Broadway, Cincinnati, Ohio 45202. Western-Southern Life
Assurance Company is a wholly-owned subsidiary of The Western and Southern Life
Insurance Company. As of June 30, 1997, the Advisor had assets under management
of $182 million. For the fiscal year ended December 31, 1996, the Advisor
received $127,974 from the Trust (on behalf of the Portfolio) for its services
as investment advisor. Had the Amendment been in effect for that period, the
Advisor would have received $136,506 from the Trust (on behalf of the Portfolio)
for its services as investment advisor (an increase of 6.67% over the amount
actually received).
For the fiscal year ended December 31, 1996, the Advisor waived all
fees for its services as sponsor to the Trust. If such fees had not been waived,
the Trust, on behalf of the Portfolio, would have paid the Advisor, for its role
as sponsor $34,126. Whether or not the Amendment is approved by holders of
Interests in the Portfolio, the Advisor will continue as sponsor to the Trust.
17
<PAGE> 21
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF THE ADVISOR
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
---------------------
NAME AND ADDRESS* WITH TOUCHSTONE ADVISORS PRINCIPAL OCCUPATION
- ----------------- ------------------------ --------------------
<S> <C> <C>
James N. Clark* Director Executive Vice President,
The Western and Southern
Life Insurance Company
Edward G. Harness, Jr. Director, President and President, IFS
Chief Executive Officer Financial Services, Inc.
William F. Ledwin* Director Senior Vice President, The
Western and Southern Life
Insurance Company
Donald J. Wuebbling* Director, Secretary Vice President and General
and Chief Legal Officer Counsel, The Western and
Southern Life Insurance
Company
Edward S. Heenan* Vice President and Controller Vice President and
Comptroller, The Western and
Southern Life Insurance
Company
Brian Manley Vice President and Chief Vice President, Touchstone
Financial Officer Securities, Inc.
Richard K. Taulbee* Vice President Vice President, The Western
And Southern Life Insurance
Company
Patricia Wilson Chief Compliance Officer same
Robert F. Morand* Assistant Secretary Attorney,
The Western and Southern
Life Insurance Company
</TABLE>
18
<PAGE> 22
<TABLE>
<S> <C> <C>
Robert A. Dressman* Assistant Treasurer Assistant Treasurer,
The Western and Southern
Life Insurance Company
Timothy D. Speed* Assistant Treasurer Assistant Vice President,
The Western and Southern
Life Insurance Company
- -----------------
<FN>
*Principal business address is 400 Broadway, Cincinnati, Ohio 45202
</TABLE>
TRUSTEES' CONSIDERATION
The Board of Trustees of the Trust believes that the terms of the
Amendment are fair to, and in the best interest of, the Portfolio and the Trust
and the holders of Interests in the Portfolio. The Trust's Board of Trustees,
including the independent Trustees voting separately, recommends approval of the
Amendment by the Contract Owners who have allocated value to the Portfolio and
who, as a result, are entitled to instruct the Separate Accounts in the voting
of their Interests in the Portfolio. In making this recommendation, the Trustees
considered the nature and quality of the services that the Advisor has provided
to the Portfolio, the fees charged by investment advisors providing services
comparable to those of the Advisor and the fees that would be charged to the
Advisor by Scudder, if it is selected as a portfolio advisor. After
consideration of the matter, the Board of Trustees of the Trust concluded that
the fee increase proposed in the Amendment was appropriate.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT HOLDERS OF INTERESTS IN THE
PORTFOLIO VOTE IN FAVOR OF THE PROPOSAL.
PROPOSAL 4
AMENDMENT TO FUNDAMENTAL INVESTMENT RESTRICTION
Under the 1940 Act, all investment policies of an investment company
(e.g., the Portfolio) must be classified as either "fundamental" or
"non-fundamental." A fundamental policy may not be changed without the approval
of the holders of the investment company's (e.g., the Portfolio's) outstanding
voting securities; a non-fundamental policy may be changed by the Trustees
without such approval.
The Portfolio has adopted certain fundamental policies to reflect
business or industry conditions which in some cases are no longer in effect or
have changed. Accordingly, the Trustees have authorized a change to the
investment restriction adopted in connection with the Portfolio's investments in
real estate in order to clarify the applicability of such restriction, which is
required to be fundamental.
19
<PAGE> 23
Investment Restriction no. 4 currently provides that:
"The Portfolio may not:
purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity
contracts (except futures and option contracts) in the ordinary course
of business (except that the Portfolio (Trust) may hold and sell, for
the Portfolio's (Fund's) portfolio, real estate acquired as a result of
the Portfolio's (Fund's) ownership of securities)."
The Trustees propose to split Investment Restriction no. 4 into two
restrictions with respect to the Portfolio and to reword the restriction to
clarify that the Portfolio may invest in the securities of real estate
investment trusts ("REITs"). The Trustees have approved, subject to the approval
of holders of Interests in the Portfolio, the following two Investment
Restrictions which would replace Investment Restriction no. 4 with respect to
the Portfolio:
"The Portfolio may not:
4a) purchase or sell real estate (except that (a) the Portfolio may
invest in (i) securities of entities that invest or deal in real
estate, mortgages, or interests therein and (ii) securities secured by
real estate or interests therein and (b) the Portfolio may hold and
sell real estate acquired as a result of the Portfolio's ownership of
securities;
4b) purchase or sell interests in oil, gas or mineral leases,
commodities or commodity contracts (except futures and option
contracts) in the ordinary course of business.
TRUSTEES CONSIDERATION
The Board of Trustees of the Trust believes that the amendment to the
Portfolio's fundamental investment restriction relating to real estate is in the
best interest of the Portfolio, the Trust and the holders of Interests in the
Portfolio. The Trust's Board of Trustees, including the independent Trustees of
the Trust voting separately, recommends approval by the holders of Interests in
the Portfolio of the amended investment restriction. In making this
recommendation, the Trustees considered that the Portfolio's ability to adjust
to a changing investment environment will be enhanced by the amendment to the
Portfolio's fundamental investment restriction described above.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT INTEREST HOLDERS VOTE IN FAVOR OF
THE PROPOSAL.
20
<PAGE> 24
REQUIRED VOTE AND TRUSTEES RECOMMENDATION FOR PROPOSALS
At the Meeting, Separate Accounts 1 and 2, acting on behalf of their
Growth & Income sub-accounts, will vote, based on instructions received from
Contract Owners who hold value in the Portfolio, on (i) the Current Portfolio
Advisory Agreement, (ii) the New Portfolio Advisory Agreement, (iii) the
Amendment to the Investment Advisory Agreement between the Trust and the
Advisor, and (iv) the amendment to the Portfolio's fundamental investment
restriction relating to investments in real estate.
The affirmative vote of the holders of a "majority of the outstanding
voting securities" of the Portfolio, which are held in part by Separate Accounts
1 and 2 and the remainder by Western Southern Life Assurance Company through
Separate Account A, is required to approve each proposal. "Majority of the
outstanding voting securities" of the Portfolio for this purpose under the 1940
Act means the lesser of (1) 67% of the securities of the Portfolio present, if
more than 50% of the outstanding securities of the Portfolio are represented and
voting, or (2) more than 50% of such outstanding securities. Since
Western-Southern Life Assurance Company, acting for the benefit of The Western
and Southern Life Insurance Company Pension Plan, whose assets are held by
Separate Account A, owns more than 50% of the outstanding securities of the
Portfolio, and intends to vote in favor of each Proposal, it is expected that
each Proposal will be approved.
THE TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT INTEREST HOLDERS VOTE IN FAVOR OF
EACH PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of June 30, 1997, the following persons were beneficial owners of
more than 5% of the outstanding Interests of the Portfolio:
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
- ------------------------------------ -------------------- ----------------
<S> <C> <C>
Separate Account A of
Western-Southern Life _______ _____%
Assurance Company
400 Broadway
Cincinnati, Ohio 45202
Separate Account 1 of
Western-Southern Life _______ _____
Assurance Company
</TABLE>
21
<PAGE> 25
<TABLE>
<S> <C> <C>
Separate Account 2 of
Western-Southern Life _______ _____
Assurance Company
Western-Southern Life _______ _____
Assurance Company
</TABLE>
To the knowledge of the Trusts, no other person beneficially owned more than
5% of the outstanding Interests as of June 30, 1997.
As of June 30, 1997, the Trustees and officers of the Trust as a group
beneficially owned less than 1% of the outstanding Interests of the Portfolio.
GENERAL INFORMATION
ADMINISTRATOR AND PRINCIPAL UNDERWRITER
Investors Bank & Trust Company ("Investors Bank"), located at 200
Clarendon Street, Boston, Massachusetts 02116, provides administrative,
custodial and fund accounting services for the Trust and serves as transfer
agent for the Trust.
Touchstone Securities, Inc., located at 311 Pike Street, Cincinnati,
Ohio 45202, serves as the Trust's distributor.
OTHER MATTERS TO COME BEFORE THE MEETING
The Trusts' management does not know of any matters to be presented at
the Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the proxy holders will vote
thereon in accordance with their best judgment.
PORTFOLIO TRANSACTIONS
The Portfolio does not allocate its portfolio brokerage on the basis of
the sale of its shares, although brokerage firms whose customers purchase shares
of the Portfolio may participate in brokerage commissions. Brokerage
transactions are not placed with any person affiliated with the Trusts or the
Advisor. Scudder may place brokerage transactions with Scudder Investor
Services, Inc. ("SIS"), an affiliate of Scudder. SIS may be a major recipient of
brokerage commissions paid by the Portfolio.
PROPOSALS BY HOLDERS OF INTERESTS IN THE PORTFOLIO
22
<PAGE> 26
The Meeting is a special meeting of holders of Interests in the
Portfolio. The Trust is not required to, nor does it intend to, hold regular
annual meetings of the holders of Interests in the Portfolios. If such a meeting
is called, any Interest holder who wishes to submit a proposal for consideration
at the meeting should submit the proposal promptly to the Trust.
REPORTS TO HOLDERS OF INTERESTS IN THE PORTFOLIO
The Trust will furnish, without charge, a copy of its most recent
Annual Report to holders of Interests in the Portfolio upon request within three
business days of the request. Requests for such reports can be made by calling
(800) 669-2796 (press 3) or in writing to the Trust, 311 Pike Street,
Cincinnati, Ohio 45202.
SCUDDER AND ZURICH INFORMATION
All information contained in this Proxy Statement about Scudder,
Zurich, their respective affiliates, and the Transactions has been provided by
Scudder.
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED, PROMPT
EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Trustees of the Trust
Andrew S. Josef
Secretary
August 29, 1997
Cincinnati, Ohio
23
<PAGE> 27
Exhibit A
PORTFOLIO ADVISORY AGREEMENT
SELECT ADVISORS PORTFOLIOS
GROWTH & INCOME PORTFOLIO
GROWTH & INCOME II PORTFOLIO
This PORTFOLIO ADVISORY AGREEMENT is made as of the ___ day of
______________, 1997, by and between TOUCHSTONE ADVISORS, INC., an Ohio
corporation (the "Advisor"), and Scudder Stevens & Clark Inc. (the "Portfolio
Advisor"), ___________________________________.
WHEREAS, the Advisor has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and has been retained by Select Advisors Portfolios (the
"Trust"), a New York trust organized pursuant to a Declaration of Trust dated
February 7, 1994 and registered as an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act") to provide investment
advisory services to the Growth & Income Portfolio and the Growth and Income II
Portfolio (herein together the "Portfolio"); and
WHEREAS, the Portfolio Advisor also is an investment advisor registered
under the Advisers Act; and
WHEREAS, the Advisor desires to retain the Portfolio Advisor to furnish
it with portfolio management services in connection with the Advisor's
investment advisory activities on behalf of the Portfolio, and the Portfolio
Advisor is willing to furnish such services to the Advisor and the Portfolio;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE PORTFOLIO ADVISOR. In accordance with and subject
to the Investment Advisory Agreement between the Trust and the Advisor, attached
hereto as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Portfolio Advisor to manage the investment and reinvestment of those assets of
the Portfolio allocated to it by the Advisor (the "Portfolio Assets"), subject
to the control and direction of the Advisor and the Trust's Board of Trustees,
for the period and on the terms hereinafter set forth. The Advisor hereby
represents that (i) it has authority under the Advisory Agreement to appoint the
Portfolio Advisor to act as an investment adviser to the Trust, (ii) this
Agreement is valid and binding upon the Advisor, and (iii) with respect to this
Agreement, the conditions of Rule 15a-4 under the 1940 Act have been fulfilled.
The Portfolio Advisor hereby accepts such employment and agrees during such
period to render the services and to perform the duties called for by this
Agreement for the
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compensation herein provided. The Portfolio Advisor shall at
all times maintain its registration as an investment advisor under the Advisers
Act and shall otherwise comply in all material respects with all applicable laws
and regulations, both state and federal. The Portfolio Advisor shall for all
purposes herein be deemed an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust or the Portfolio.
2. DUTIES OF THE PORTFOLIO ADVISOR. The Portfolio Advisor will provide
the following services and undertake the following duties:
a. The Portfolio Advisor will manage the investment and
reinvestment of the Portfolio Assets, subject to and in accordance with
the investment objectives, policies and restrictions of the Portfolio
and any directions which the Advisor or the Trust's Board of Trustees
may give from time to time with respect to the Portfolio. In
furtherance of the foregoing, the Portfolio Advisor will make all
determinations with respect to the investment of the Portfolio Assets
and the purchase and sale of portfolio securities and shall take such
steps as may be necessary or advisable to implement the same. The
Portfolio Advisor also will determine the manner in which voting
rights, rights to consent to corporate action and any other rights
pertaining to the portfolio securities will be exercised. The Portfolio
Advisor will render regular reports to the Trust's Board of Trustees,
to the Advisor and to RogersCasey Consulting, Inc. (or such other
advisor or advisors as the Advisor shall engage to assist it in the
evaluation of the performance and activities of the Portfolio Advisor).
Such reports shall be made in such form and manner and with respect to
such matters regarding the Portfolio and the Portfolio Advisor as the
Trust, the Advisor or RogersCasey Consulting, Inc. shall from time to
time reasonably request.
b. The Portfolio Advisor shall provide support to the Advisor
with respect to the marketing of the Portfolio in a manner comparable
to the support provided to comparable clients of the Portfolio Advisor,
including but not limited to: (i) permission to use the Portfolio
Advisor's name as provided in Section 6, (ii) permission to use the
past performance and investment history of the Portfolio Advisor as the
same is applicable to the Portfolio provided counsel to the Trust
determine that the use of such information and the manner of
presentation of such information is legally permissible, (iii) access
to the individual(s) responsible for day-to-day management of the
Portfolio for marketing conferences, teleconferences and other
activities involving the promotion of the Portfolio, subject to the
reasonable request of the Advisor, (iv) permission to use biographical
and historical data of the Portfolio Advisor and individual manager(s),
and (v) with respect to clients whose names are provided to the Advisor
by the Portfolio Advisor in writing prior to use, permission to use the
names of these clients, subject to any
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restrictions imposed by these clients on the use of such names or by
the Advisers Act and the rules adopted thereunder.
c. The Portfolio Advisor will, in the name of the Portfolio,
place orders for the execution of all portfolio transactions in
accordance with the policies with respect thereto set forth in the
Trust's registration statements under the 1940 Act and the Securities
Act of 1933, as such registration statements may be in effect from time
to time. In connection with the placement of orders for the execution
of portfolio transactions, the Portfolio Advisor will create and
maintain all necessary brokerage records of the Portfolio in accordance
with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act. All
records shall be the property of the Trust and shall be available for
inspection and use by the Securities and Exchange Commission (the
"SEC"), the Trust or any person retained by the Trust. Where
applicable, such records shall be maintained by the Advisor for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
When placing orders with brokers and dealers, the Portfolio Advisor
shall seek to obtain the most favorable price and execution available
for the Portfolio, and in placing such orders the Portfolio Advisor may
consider a number of factors, including, without limitation, the
overall direct net economic result to the Portfolio (including
commissions, which may not be the lowest available but ordinarily
should not be higher than the generally prevailing competitive rate),
the financial strength and stability of the broker, the efficiency with
which the transaction will be effected, the ability to effect the
transaction at all where a large block is involved and the availability
of the broker or dealer to stand ready to execute possibly difficult
transactions in the future. The Portfolio Advisor is specifically
authorized, to the extent authorized by law (including, without
limitation, Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), to pay a broker or dealer who provides
research services to the Portfolio Advisor an amount of commission for
effecting a portfolio transaction in excess of the amount of commission
another broker or dealer would have charged for effecting such
transaction, in recognition of such additional research services
rendered by the broker or dealer, but only if the Portfolio Advisor
determines in good faith that the excess commission is reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer viewed in terms of the particular transaction
or the Portfolio Advisor's overall responsibilities with respect to
discretionary accounts that it manages, and that the Portfolio derives
or will derive a reasonably significant benefit from such research
services. The Portfolio Advisor will present a written report to the
Board of Trustees of the Trust, at least quarterly and at such other
times as reasonably requested by the Board of Trustees, indicating
total brokerage expenses, actual or imputed, as well as the services
obtained in consideration for such expenses, broken down by
broker-dealer and
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containing such information as the Board of Trustees reasonably shall
request.
d. The Portfolio Advisor may execute standard account
documentation, agreements, contracts and other documents (collectively
"Account Documents") as the Portfolio Advisor may be requested by
brokers, dealers, counterparties and other persons in connection with
the Portfolio Advisor's management of the Portfolio Assets, provided
that the Advisor and the Trust's Board of Trustees first authorize the
Portfolio Advisor to execute Account Documents. In such respect, and
only for this limited purpose, the Portfolio Adviser shall act as the
agent and/or attorney-in-fact of the Trust and/or the Advisor.
e. The Advisor recognizes that, subject to the provisions of
Section 2c, Scudder Investor Services, Inc. or its successor ("SIS"),
an affiliate of the Portfolio Advisor, may act as the regular broker
for the portfolio so long as it is lawful for it so to act and that SIS
may be a major recipient of brokerage commissions paid by the
portfolio. SIS may effect securities transactions for the portfolio
only if (i) the commissions, fees or other remuneration received or to
be received by it are reasonable and fair compared to the commissions,
fees or other remuneration received by other brokers in connection with
comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time and
(ii) the Trustees, including a majority of those Trustees who are not
interested persons, have adopted procedures pursuant to Rule 17e-1
under the 1940 Act for determining the permissible level of such
commissions.
f. The Advisor understands that (i) when orders to purchase or
sell the same security on identical terms are placed by more than one
of the funds and/or other advisory accounts managed by the Portfolio
Advisor or its affiliates, the transactions generally will be executed
as received, although a fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its order
executed first, (ii) although all orders placed on behalf of the
Portfolio will be considered free trades, having an order placed first
in the market does not necessarily guarantee the most favorable price,
and (iii) purchases will be combined where possible for the purpose of
negotiating brokerage commissions, which in some cases might have a
detrimental effect on the price or volume of the security in a
particular transaction as far as the Portfolio is concerned.
g. The Portfolio Advisor may enter into arrangements with
other persons affiliated with the Portfolio Advisor for the provision
of certain personnel and facilities to the Portfolio Advisor to better
enable it to fulfill its duties and obligations under this Agreement.
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h. In the event of any reorganization or other change in the
Portfolio Advisor, its investment principals, supervisors or members of
its investment (or comparable) committee, the Portfolio Advisor shall
give the Advisor and the Trust's Board of Trustees written notice of
such reorganization or change within a reasonable time (but not later
than 30 days) after such reorganization or change.
i. The Portfolio Advisor will bear its expenses of providing
services to the Portfolio pursuant to this Agreement except such
expenses as are undertaken by the Advisor or the Trust.
j. The Portfolio Advisor will manage the Portfolio Assets and
the investment and reinvestment of such assets so as to seek to comply
with the provisions of the 1940 Act and with Subchapter M of the
Internal Revenue Code of 1986, as amended.
3. COMPENSATION OF THE PORTFOLIO ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Portfolio Advisor, the Advisor will pay to
the Portfolio Advisor a monthly fee equal on an annual basis to 0.45%
of the average daily net assets of the Portfolio. Commencing as of the
date next following the date upon which the owners of interests in the
Portfolio shall have approved such change, the Advisor will pay to the
Portfolio Advisor a monthly fee equal to 0.50% of the first $150
million of the average daily net assets of the Portfolio, and 0.45% of
such average daily net assets in excess of $150 million.
b. The fee of the Portfolio Advisor hereunder shall be
computed and accrued daily and paid monthly. If the Portfolio Advisor
serves in such capacity for less than the whole of any period specified
in Section 3a, the fee to the Portfolio Advisor shall be prorated. For
purposes of calculating the Portfolio Advisor's fee, the daily value of
the Portfolio's net assets shall be computed by the same method as the
Trust uses to compute the net asset value of the Portfolio for purposes
of purchases and redemptions of interests thereof.
c. The Portfolio Advisor reserves the right to waive all or a
part of its fees hereunder.
4. ACTIVITIES OF THE PORTFOLIO ADVISOR. It is understood that the
Portfolio Advisor may perform investment advisory services for various other
clients, including other investment companies. Furthermore, it is understood
that the Portfolio Advisor may give advice, and take action, with respect to its
other clients that may differ from the advice given, or the time and nature of
action taken, with respect to the Portfolio. The Portfolio Advisor will report
to the Board of Trustees
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of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Portfolio Advisor, (ii) the nature and amount of transactions
affecting the Portfolio that involve the Portfolio Advisor and affiliates of the
Portfolio Advisor, (iii) information regarding any potential conflicts of
interest arising by reason of its continuing provision of advisory services to
the Portfolio and to its other accounts, and (iv) such other information as the
Board of Trustees shall reasonably request regarding the Portfolio, the
Portfolio's performance, the performance of other comparable accounts to whom
the Portfolio Advisor provides services, and the plans of, and the capability
of, the Portfolio Advisor with respect to providing future services to the
Portfolio and its other accounts. The Portfolio Advisor agrees, on an ongoing
basis, to notify the Advisor of any change in the individual(s) responsible for
day-to-day management of the Portfolio and any material change in the investment
strategies employed by the Portfolio Advisor in managing the Portfolio. At least
annually, the Portfolio Advisor shall report to the Trustees the total number
and type of such other accounts and the approximate total asset value thereof
(but not the identities of the beneficial owners of such accounts). The
Portfolio Advisor agrees to submit to the Trust a statement defining its
policies with respect to the allocation of investment opportunities among the
Portfolio and its other clients.
It is understood that the Portfolio Advisor may become interested in
the Trust as an interest holder or otherwise.
The Portfolio Advisor has supplied to the Advisor and the Trust copies
of its Form ADV with all exhibits and attachments thereto (including the
Portfolio Advisor's statement of financial condition) and will hereafter supply
to the Advisor, promptly upon the preparation thereof, copies of all amendments
or restatements of such document.
Nothing in this Agreement shall prevent the Portfolio Advisor, any
parent, subsidiary or affiliate, or any director or officer thereof, from acting
as investment advisor for any other person, firm, or corporation, and shall not
in any way limit or restrict the Portfolio Advisor or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities or commodities for its or their own account or for the account of
others for whom it or they may be acting, if such activities will not adversely
affect or otherwise impair the performance by the Portfolio Advisor of its
duties and obligations under this Agreement. The Portfolio Advisor will (i)
supply to the Advisor, upon the execution of this Agreement, with a true copy of
its currently effective Code of Ethics and policies regarding insider trading
and (ii) thereafter supply to Advisor copies of any amendments to or
restatements of such Code of Ethics or insider trading policies. The Portfolio
Advisor agrees to provide the Advisor, on a quarterly basis, a report with
respect to material violations of the Portfolio Advisor's Code of Ethics or
insider trading policies by portfolio managers who have responsibility for
managing the Portfolio or a written statement indicating that no such violations
have occurred during the quarter. In addition, the Portfolio Advisor agrees to
provide to the
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Advisor other information concerning violations of its Code of Ethics or insider
trading policies to the same extent as it provides such information to the
Boards of Directors of its proprietary mutual funds. The parties agree to be
bound by the provisions of Rule 17j-1 under the 1940 Act as it may be amended to
the extent that the provisions of the Rule are stricter than the provisions of
this paragraph.
5. PROVISION OF INFORMATION BY THE ADVISOR. To facilitate the Portfolio
Advisor's fulfillment of its obligations under this Agreement, the Advisor
agrees (i) promptly to provide the Portfolio Advisor with all amendments or
supplements to the Trust's registration statements, its Agreement and
Declaration of Trust, and its By-Laws, (ii) on an ongoing basis, to notify the
Portfolio Advisor expressly in writing of each change in the fundamental and
nonfundamental investment policies of the Portfolio, (iii) to provide or cause
to be provided to the Portfolio Advisor on an ongoing basis such assistance as
may be reasonably requested by the Portfolio Advisor in connection with its
activities under this Agreement, including, without limitation, information
concerning the Portfolio, its available funds, or funds that may reasonably
become available for investment, and information as to the general condition of
the Portfolio's affairs, (iv) to provide or cause to be provided to the
Portfolio Advisor on an ongoing basis such information as is reasonably
requested by the Portfolio Advisor for performance by the Portfolio Advisor of
its obligations under this Agreement and the Portfolio Advisor shall not be in
breach of any term of this Agreement or be deemed to have acted negligently if
such alleged breach or negligent act is the result of the Advisor`s failure to
provide or cause to be provided such requested information and the Portfolio
Advisor's reliance on the information most recently furnished to the Portfolio
Advisor, and (v) promptly to provide the Portfolio Advisor with any guidelines
and procedures applicable to the Portfolio Advisor or the Portfolio adopted from
time to time by the Board of Trustees of the Trust and all amendments thereto.
6. USE OF NAMES. Neither the Advisor nor the Trust shall use the name
of the Portfolio Advisor in any prospectus, sales literature or other material
relating to the Advisor or the Trust in any manner not approved in advance by
the Portfolio Advisor; provided, however, that the Portfolio Advisor will
approve all uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by the SEC or a state securities
commission; and provided further, that in no event shall such approval be
unreasonably withheld. The Portfolio Advisor shall not use the name of the
Advisor or the Trust in any material relating to the Portfolio Advisor in any
manner not approved in advance by the Advisor or the Trust, as the case may be;
provided, however, that the Advisor and the Trust shall each approve all uses of
their respective names which merely refer in accurate terms to the appointment
of the Portfolio Advisor hereunder or which are required by the SEC or a state
securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld. Upon termination of this Agreement, the
Advisor and the Trust shall immediately cease to use the name of the Portfolio
Advisor.
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7. LIMITATION OF LIABILITY OF THE PORTFOLIO ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Portfolio Advisor, the Portfolio Advisor
shall not be subject to liability to the Advisor, the Trust or to any holder of
an interest in the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security. The Portfolio
Advisor shall not be liable to the Advisor or the Trust for any loss suffered as
a consequence of any action or inaction of other service providers to the Trust,
provided such action or inaction of such other service providers to the
Portfolio is not a result of the willful misconduct, bad faith or gross
negligence in the performance of, or from reckless disregard of, the duties of
the Portfolio Advisor under this Agreement. As used in this Section 7, the term
"Portfolio Advisor" shall include the Portfolio Advisor and/or any of its
affiliates and the directors, officers and employees of the Portfolio Advisor
and/or any of its affiliates.
8. LIMITATION OF TRUST'S LIABILITY. The Portfolio Advisor acknowledges
that it has received notice of and accepts the limitations upon the Trust's
liability set forth in its Declaration of Trust. The Portfolio Advisor agrees
that (i) the Trust's obligations to the Portfolio Advisor under this Agreement
(or indirectly under the Advisory Agreement) shall be limited, in any event to
the assets of the Portfolio and (ii) the Portfolio Advisor shall not seek
satisfaction of any such obligation from the holders of interests in the
Portfolio nor from any Trustee, officer, employee or agent of the Trust.
9. FORCE MAJEURE. The Portfolio Advisor shall not be liable for delays
or errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Portfolio Advisor shall take reasonable steps to
minimize service interruptions but shall have no liability with respect thereto.
10. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, until December 31, 1998; and it
shall continue thereafter provided that such continuance is
specifically approved by the parties and, in addition, at least
annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the Portfolio or
by vote of a majority of the Trust's Board of Trustees and (ii) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of either the Advisor or the Portfolio
Advisor, cast in person at a meeting called for the purpose of voting
on such approval.
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b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the Portfolio, in any such case upon not less than 60
days' prior written notice to the Portfolio Advisor and (ii) by the
Portfolio Advisor upon not less than 60 days' prior written notice to
the Advisor and the Trust. This Agreement shall terminate automatically
in the event of its assignment.
c. If this Agreement is not approved by the favorable vote of
a majority of the outstanding voting securities of the Portfolio during
the 120 day period after the effective date of the Agreement, it will
terminate as of the close of business on the last day of such period.
d. This Agreement will also terminate upon written notice to
the other party that the other party is in material breach of the
Agreement, unless the other party in material breach of this Agreement
cures such breach to the reasonable satisfaction of the party alleging
the breach within 30 days after the written notice.
e. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Portfolio affected
by such change.
f. The terms "affiliated persons," "assignment," "interested
persons" and "majority of the outstanding voting securities" shall have
the meaning set forth for such terms in Section 2(a) of the 1940 Act.
12. SEVERABILITY AND INCORPORATED EFFECT. If any provision of this
Agreement shall become or shall be found to be invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is relaxed by a rule, regulation or
order of the SEC, whether of specific or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
13. NOTICE. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the other party at such address as such other party may designate in accordance
with this paragraph for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Trust and that of the Advisor
for this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Portfolio Advisor shall be 345 Park Avenue, New York, New York
10154.
14. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
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hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio, or any applicable provisions of the
1940 Act. To the extent that the laws of the State of Ohio, or any of the
provisions in the Agreement, conflict with applicable provisions of the 1940
Act, the latter shall control. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
Attest:
BY
- ---------------------------- ----------------------------------
Secretary Edward G. Harness, Jr.
President
SCUDDER STEVENS & CLARK INC.
Attest:
BY
- ---------------------------- ----------------------------------
Secretary
Name:
-------------------------
Title:
-------------------------
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EXHIBIT B
SIMILAR INVESTMENT COMPANIES MANAGED BY SCUDDER
FUNDS, ASSETS AS OF JUNE 30, 1997
AND MANAGEMENT FEE RATES
Scudder Growth and Income Fund
Assets as of 6/30/97 - $5.706 billion
<TABLE>
<CAPTION>
ANNUAL RATE ASSET BREAKOUT
----------- --------------
<S> <C> <C>
0.60% first $ 500,000,000
0.55% next $ 500,000,000
0.50% next $ 500,000,000
0.475% next $ 500,000,000
0.45% next $ 1,000,000,000
0.425% next $ 1,500,000,000
0.405% over $ 4,500,000,000
</TABLE>
Scudder Variable Life Investment Fund
Growth and Income Portfolio
Assets as of 6/30/97 - $124.6 million
<TABLE>
<CAPTION>
ANNUAL RATE ASSET BREAKOUT
----------- --------------
<S> <C>
0.475% all net assets
</TABLE>
<PAGE> 38
AARP Investment Program
AARP Growth and Income Fund
Assets as of 6/30/97 - $5.899 billion
Base Fee*
<TABLE>
<CAPTION>
ANNUAL INVESTMENT PROGRAM
RATE ASSET BREAKPOINT
---- ----------------
<S> <C> <C>
0.35% first $ 2,000,000,000
0.33% next $ 2,000,000,000
0.30% next $ 2,000,000,000
0.28% next $ 2,000,000,000
0.26% next $ 3,000,000,000
0.25% next $ 3,000,000,000
0.24% over $ 14,000,000,000
</TABLE>
Additional
Growth & Income Fund Fee
<TABLE>
<CAPTION>
ANNUAL FUND
RATE ASSET BREAKPOINT
---- ----------------
<S> <C>
0.19% all net assets
</TABLE>
*Allocated to AARP Growth and Income Fund based on its pro rata share of Program
net assets.
<PAGE> 39
Exhibit C
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
SELECT ADVISORS PORTFOLIOS
INVESTMENT ADVISORY AGREEMENT amended and restated as of ________________, 1997,
by and between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"),
and SELECT ADVISORS PORTFOLIOS, a New York master trust created pursuant to a
Declaration of Trust dated February 7, 1994, as amended from time to time (the
"Trust").
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act"); and
WHEREAS, interests in the Trust are divided into separate subtrusts
(each, along with any subtrust which may in the future be established, a
"Portfolio"); and
WHEREAS, the Trust desires to avail itself of the services,
information, advice, assistance and facilities of an investment advisor and to
have an investment advisor perform for it various investment advisory and
research services and other management services; and
WHEREAS, the Advisor is an investment Advisor registered under the
Investment Advisers Act of 1940, as amended, and desires to provide investment
advisory services to the Trust; and
WHEREAS, pursuant to Section 10c of this Agreement, the Trust and the
Advisor desire to amend the existing Investment Advisory Agreement dated
September 9, 1994, and the amendment thereto dated as of May 1, 1997, to
incorporate the amendment of May 1, 1997 and to reflect an increase in the
advisory fees to be paid by the Growth and Income Portfolio and the Growth and
Income Portfolio II; and
WHEREAS, the required approvals by Board of Trustees of the Trust and
the shareholders of the Trust have been obtained;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE ADVISOR. The Trust hereby employs the Advisor to
manage the investment and reinvestment of the assets of each Portfolio subject
to the control and direction of the Trust's Board of Trustees, for the period on
the terms hereinafter set forth. The Advisor hereby accepts such employment and
agrees during such period to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Advisor shall for all
purposes herein be deemed to be independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
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2. OBLIGATIONS AND SERVICES TO BE PROVIDED BY THE ADVISOR. In providing
the services and assuming the obligations set forth herein, the Advisor may, at
its expense, employ one or more subadvisors for any Portfolio. Any agreement
between the Advisor and a subadvisor shall be subject to the renewal,
termination and amendment provisions of paragraph 10 hereof. The Advisor
undertakes to provide the following services and to assume the following
obligations:
a) The Advisor will manage the investment and
reinvestment of the assets of each Portfolio, subject to and
in accordance with the respective investment objectives and
policies of each Portfolio and any directions which the
Trust's Board of Trustees may issue from time to time. In
pursuance of the foregoing, the Advisor may engage separate
investment advisors ("Portfolio Advisor(s)") to make all
determinations with respect to the investment of the assets
of each Portfolio, to effect the purchase and sale of
portfolio securities and to take such steps as may be
necessary to implement the same. Such determination and
services by each Portfolio Advisor shall also include
determining the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining
to the portfolio securities shall be exercised. The Advisor
shall, and shall cause each Portfolio Advisor to, render
regular reports to the Trust's Board of Trustees concerning
the Trust's and each Portfolio's investment activities.
b) The Advisor shall, or shall cause the respective Portfolio
Advisor(s) to place orders for the execution of all portfolio
transactions, in the name of the respective Portfolio and in
accordance with the policies with respect thereto set forth in
the Trust's registration statements under the 1940 Act and the
Securities Act of 1933, as such registration statements may be
amended from time to time. In connection with the placement of
orders for the execution of portfolio transactions, the
Advisor shall create and maintain (or cause the Portfolio
Advisors to create and maintain) all necessary brokerage
records for each Portfolio, which records shall comply with
all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act.
All records shall be the property of the Trust and shall be
available for inspection and use by the Securities and
Exchange Commission (the "SEC"), the Trust or any person
retained by the Trust. Where applicable, such records shall be
maintained by the Advisor (or Portfolio Advisor) for the
periods and in the places required by Rule 31a-02 under the
1940 Act.
c) In the event of any reorganization or other change in the
Advisor, its investment principals, supervisors or members of
its investment (or comparable) committee, the Advisor shall
give the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not
later than 30 days) after such reorganization or change.
d) The Advisor shall bear its expenses of providing services to
the Trust pursuant to this Agreement except such expenses as
are undertaken by the Trust. In addition, the Advisor shall
pay the salaries and fees, if any, of all Trustees, officers
and
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<PAGE> 41
employees of the Trust who are affiliated persons, as defined
in Section 2(a)(3) of the 1940 Act, of the Advisor.
e) The Advisor will manage, or will cause the Portfolio Advisors
to manage, the Portfolio Assets and the investment and
reinvestment of such assets so as to comply with the
provisions of the 1940 Act and with Subchapter M of the
Internal Revenue Code of 1986, as amended.
3. EXPENSES. The Trust shall pay the expenses of its operation,
including but not limited to (i) charges and expenses for Trust accounting,
pricing and appraisal services and related overhead, (ii) the charges and
expenses of the Portfolio's auditor's; (iii) the charges and expenses of any
custodian, transfer agent, plan agent, dividend disbursing agent and registrar
appointed by the Trust with respect to the Portfolios; (iv) brokers'
commissions, and issue and transfer taxes, chargeable to the Trust in connection
with securities transactions to which the Trust is a party; (v) insurance
premiums, interest charges, dues and fees for Trust membership in trade
associations and all taxes and fees payable by the Trust to federal, state or
other governmental agencies; (vi) fees and expenses involved in registering and
maintaining registrations of the Trust and/or interests in the Trust with the
SEC, state or blue sky securities agencies and foreign countries, including the
preparation of Prospectuses and Statements of Additional Information for filing
with the SEC; (vii) all expenses of meetings of Trustees and of interest holders
of the Trust and of preparing, printing and distributing prospectuses, notices,
proxy statements and all reports to shareholders and to governmental agencies;
(viii) charges and expenses of legal counsel to the Trust; (ix) compensation of
Trustees of the Trust; (x) the cost of preparing and printing share
certificates; and (xi) interest on borrowed money, if any.
4. COMPENSATION OF THE ADVISOR.
a) As compensation for the services rendered and obligations
assumed hereunder by the Advisor, the Trust shall pay to the
Advisor monthly a fee that is equal on an annual basis to that
percentage of the average daily net assets of each Portfolio
set forth on Schedule 1 attached hereto (and with respect to
any future Portfolio, such percentage as the Trust and the
Advisor may agree to from time to time). Such fee shall be
computed and accrued daily. If the Advisor serves as
investment advisor for less than the whole of any period
specified in this Section 4a, the compensation to the Advisor
shall be prorated. For purposes of calculating the Advisor's
fee, the daily value of each Portfolio's net assets shall be
computed by the same method as the Trust uses to compute the
net asset value of that Portfolio.
b) The Advisor will pay all fees owing to each Portfolio Advisor,
and the Trust shall not be obligated to the Portfolio Advisors
in any manner with respect to the compensation of such
Portfolio Advisors.
c) The Advisor reserves the right to waive all or a part of its
fee.
5. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the Trust
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. It
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<PAGE> 42
is understood that the Trustees and officers of the Trust are or may become
interested in the Advisor as stockholders, officers or otherwise, and that
stockholders and officers of the Advisor are or may become similarly interested
in the Trust, and that the Advisor may become interested in the Trust as a
shareholder or otherwise.
6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; except that the Trust may use
such name in any document which merely refers in accurate terms to its
appointment hereunder or in any situation which is required by the SEC or a
state securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Advisor will not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; except that the Advisor may use such name in any document
which merely refers in accurate terms to the appointment of the Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission. In all other cases, the parties may use such names to the extent
that the use is approved by the party named, it being agreed that in no event
shall such approval be unreasonably withheld.
The Trustees of the Trust acknowledge that, in consideration
of the Advisor's assumption of certain organization expenses of the Trust and of
the various Portfolios, the Advisor has reserved for itself the rights to the
name "Select Advisors Portfolios" (or any similar names) and that use by the
Trust of such name shall continue only with the continuing consent of the
Advisor, which consent may be withdrawn at any time, effective immediately, upon
written notice thereof to the Trust.
7. LIMITATION OF LIABILITY OF THE ADVISOR.
a. Absent willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the
part of the Advisor, the Advisor shall not be subject to
liability to the Trust or to any holder of an interest in any
Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any
security. As used in this Section 7, the term "Advisor" shall
include Touchstone Advisors, Inc. and/or any of its affiliates
and the directors, officers and employees of Touchstone
Advisors, Inc. and/or of its affiliates.
b. The Trust will indemnify the Advisor against, and hold it
harmless from, any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses) resulting from acts or omissions of the Trust.
Indemnification shall be made only after: (i) a final decision
on the merits by a court or other body before whom the
proceeding was brought that the Trust was liable for the
damages claimed or (ii) in the absence of such a decision, a
reasonable determination based upon a review of the facts,
that the Trust was liable for the damages claimed, which
determination shall be made by either (a) the vote of a
majority of a quorum of Trustees of the Trust who are neither
"interested persons" of the Trust nor parties to the
proceeding ("disinterested non-party Trustees") or (b) an
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<PAGE> 43
independent legal counsel satisfactory to the parties hereto,
whose determination shall be set forth in a written opinion.
The Advisor shall be entitled to advances from the Trust for
payment of the reasonable expenses incurred by it in
connection with the matter as to which it is seeking
indemnification in the manner and to the fullest extent that
would be permissible under the applicable provisions of the
General Corporation Law of Ohio. The Advisor shall provide to
the Trust a written affirmation of its good faith belief that
the standard of conduct necessary for indemnification under
such law has been met and a written undertaking to repay any
such advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at least
one of the following additional conditions shall be met: (a)
the Advisor shall provide security in form and amount
acceptable to the Trust for its undertaking; (b) the Trust is
insured against losses arising by reason of the advance; or
(c) a majority of a quorum of the Trustees of the Trust, the
members of which majority are disinterested non-party
Trustees, or independent legal counsel in a written opinion,
shall have determined, based on a review of facts readily
available to the Trust at the time the advance is proposed to
be made, that there is reason to believe that the Advisor will
ultimately be found to be entitled to indemnification.
8. LIMITATION OF TRUST'S LIABILITY. The Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Advisor shall not seek satisfaction of any such obligation
from the holders of the interests in any Portfolio nor from any Trustee,
officer, employee or agent of the Trust.
9. FORCE MAJEURE. The Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
10. RENEWAL, TERMINATION AND AMENDMENT.
a) This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, for a period of twelve
months from the date hereof and it shall continue indefinitely
thereafter as to each Portfolio, provided that such
continuance is specifically approved by the parties hereto
and, in addition, at least annually by (i) the vote of holders
of a majority of the outstanding voting securities of the
affected Portfolio or by vote of a majority of the Trust's
Board of Trustees and (ii) by the vote of a majority of the
Trustees who are not parties to this Agreement or interested
persons of the Advisor, cast in person at a meeting called for
the purpose of voting on such approval.
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<PAGE> 44
b) This Agreement may be terminated at any time, with respect to
any Portfolio(s), without payment of any penalty, by the
Trust's Board of Trustees or by a vote of the majority of the
outstanding voting securities of the affected Portfolio(s)
upon 60 days' prior written notice to the Advisor and by the
Advisor upon 60 days' prior written notice to the Trust.
c) This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees
and, if required by applicable SEC rules and regulations, a
vote of the majority of the outstanding voting securities of
any Portfolio affected by such change. This Agreement shall
terminate automatically in the event of its assignment.
d) The terms "assignment," "interested persons" and "majority of
the outstanding voting securities" shall have the meaning set
forth for such terms in the 1940 Act.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions, in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered inn their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Declaration of Trust, dated as of February 7, 1994, the
obligations of this Agreement are not binding upon any of the Trustees or
interestholders of the Trust individually, but bind only the Trust estate.
SELECT ADVISORS PORTFOLIOS
By
-------------------------------------
Edward G. Harness, Jr., President
TOUCHSTONE ADVISORS, INC.
By
-------------------------------------
Brian J. Manley, Vice President
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<PAGE> 45
AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
BETWEEN SELECT ADVISORS PORTFOLIOS AND TOUCHSTONE ADVISORS, INC.
SCHEDULE 1
Portfolio Annual Rate
- --------- -----------
Emerging Growth Portfolio 0.80%
International Equity Portfolio 0.95%
Balanced Portfolio 0.80%
Income Opportunity 0.65%
Bond Portfolio 0.55%
Bond Portfolio II 0.55%
Portfoilio Annual Rate Asset Breakpoint
- --------------------------------------------------------------------------------
Growth & Income Portfolio 0.80% First $150 million of average
net assets
0.75% Average net assets in excess
of $150 million
Growth & Income Portfolio II 0.80% First $150 million of average
net assets
0.75% Average net assets in excess
of $150 million
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<PAGE> 46
TOUCHSTONE GROWTH & INCOME II PORTFOLIO
(a series of Select Advisors Portfolios)
The undersigned appoints Edward G. Harness, Jr. and Edward S. Heenan
and each of them, with full power of substitution, as attorneys and proxies of
the undersigned, and does thereby request that the votes attributable to the
undersigned be cast at the Meeting of the holders of beneficial interests in
the Growth & Income II Portfolio, a separate series of the select advisors
portfolios to be held at 11:00 a.m. on September 18,1997 at the offices of
the Trust, 311 Pike Street, Cincinnati, Ohio, and at any adjournment thereof. If
a proxy is not received from a particular interest holder, then the votes
attributable to him or her will be allocated in the same ratio as votes for
which instructions have been received.
------------------------------------------------------------------------------
THE INTEREST REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BELOW, OR IF
NO DIRECTION IS INDICATED, WILL BE VOTED FOR THE PROPOSAL BELOW.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE PROPOSAL.
<TABLE>
<CAPTION>
PLEASE VOTE BY CHECKING YOUR RESPONSE.
<S> <C> <C> <C>
1. To approve or disapprove the portfolio FOR ( ) AGAINST ( ) ABSTAIN ( )
advisory agreement, dated as of September 1, 1997,
between Touchstone Advisors, Inc. (the "Advisor")
and Scudder Stevens & Clark Inc. ("Scudder").
2. To approve or disapprove a new portfolio FOR ( ) AGAINST ( ) ABSTAIN ( )
advisory agreement between the Advisor and Scudder
(or its successor), to become effective upon the
consummation of the Transactions (as defined in the
Proxy Statement).
</TABLE>
<PAGE> 47
<TABLE>
<S> <C> <C> <C>
3. To approve or disapprove an amendment to the FOR ( ) AGAINST ( ) ABSTAIN ( )
existing investment advisory agreement between the
Trust (on behalf of the Portfolio) and the Advisor,
which would increase the fee paid by the Portfolio
to the Advisor by .05% of the Portfolio's average
net assets on the first $150 million of the
Portfolios net assets.
4. To approve or disapprove an amendment to the FOR ( ) AGAINST ( ) ABSTAIN ( )
Portfolio's fundamental investment restriction
relating to investments in real estate.
</TABLE>
TOTAL INTEREST ATTRIBUTABLE TO THE UNDERSIGNED:
PLEASE VOTE, DATE, SIGN EXACTLY NOTE: THE UNDERSIGNED HEREBY
AS YOUR NAME APPEARS BELOW, ACKNOWLEDGES RECEIPT OF
ANDRETURN THIS FORM IN THE THE NOTICE OF MEETING AND
ENCLOSED SELF-ADDRESSED PROXY STATEMENT AND
ENVELOPE. REVOKES ANY PROXY
HERETOFORE GIVEN WITH
RESPECT TO THE VOTES
COVERED BY THIS PROXY.
Dated: , 1997
-------------------
------------------------------
Signature
------------------------------
Signature If Jointly Held
