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Exhibit (d1)
INVESTMENT ADVISORY AGREEMENT
TOUCHSTONE VARIABLE SERIES TRUST
INVESTMENT ADVISORY AGREEMENT, dated as of January 1, 1999, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and TOUCHSTONE
VARIABLE SERIES TRUST (formerly Select Advisors Variable Insurance Trust) a
Massachusetts business 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, shares of beneficial interest in the Trust are divided into
separate series (each, along with any series which may in the future be
established, a "Fund"); 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;
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 Fund 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.
2. OBLIGATIONS OF 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 Fund. Any
agreement between the Advisor and a subadvisor shall be subject to the renewal,
termination and
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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 Fund, subject to
and in accordance with the respective investment
objectives and policies of each Fund 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 ("Sub-Advisor(s)") to make all
determinations with respect to the investment of the
assets of each Fund, 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 Sub-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 Sub-Advisor to, render regular reports to
the Trust's Board of Trustees concerning the Trust's
and each Fund's investment activities.
b) The Advisor shall, or shall cause the respective
Sub-Advisor(s) to place orders for the execution of
all portfolio transactions, in the name of the
respective Fund 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 Sub-Advisors
to create and maintain) all necessary brokerage
records for each Fund, 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 Sub-Advisor)
for the periods and in the places required by Rule
31a-2 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.
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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 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
Sub-Advisors to manage, the Fund 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 Trust's auditors; (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 Funds; (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 shares of 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 shareholders 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 Fund set forth on
Schedule 1 attached hereto (and with respect to any
future Fund, 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
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Advisor's fee, the daily value of each Fund's net
assets shall be computed by the same method as the
Trust uses to compute the net asset value of that
Fund.
b) The Advisor will pay all fees owing to each
Sub-Advisor, and the Trust shall not be obligated to
the Sub-Advisors in any manner with respect to the
compensation of such Sub-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 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 Funds, the Advisor has reserved for itself the rights to the name
"Touchstone Variable Series Trust" (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 shareholder in any Fund for any act
or omission in the
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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 any 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
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: (i) the Advisor shall
provide security in form and amount acceptable to the
Trust for its undertaking; (ii) the Trust is insured
against losses arising by reason of the advance; or
(iii) 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
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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 shares of
any Fund 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
Fund, 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 Fund 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.
b) This Agreement may be terminated at any time, with
respect to any Fund(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 Fund(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 Fund 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.
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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 in 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
shareholders of the Trust individually, but bind only the Trust estate.
TOUCHSTONE VARIABLE SERIES TRUST
By: /s/ Xxxxx Xxxxx
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TOUCHSTONE ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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SCHEDULE 1
Touchstone Emerging Growth Fund 0.80%
Touchstone International Equity Fund 0.95%
Touchstone Growth & Income Fund 0.80% on the first $150 million of
average daily net assets and 0.75%
on such assets in excess of
$150 million
Touchstone Balanced Fund 0.80%
Touchstone Income Opportunity Fund 0.65%
Touchstone Bond Fund 0.55%
Touchstone Value Plus Fund 0.75%
Touchstone Standby Income Fund 0.25%
