SUB-ADVISORY AGREEMENT
TOUCHSTONE EMERGING GROWTH FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of July _____, 2001, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and TCW
INVESTMENT MANAGEMENT COMPANY, a California corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to a Declaration of Trust dated February 7, 1994 and registered as an open-end
diversified management investment company under the Investment Company Act of
1940 (the "1940 Act"), to provide investment advisory services with respect to
certain assets of the Touchstone Emerging Growth Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor, under an
interim sub-advisory agreement in accordance with the provisions of Rule 15a-4
promulgated under the 1940 Act, to furnish it with portfolio management services
in connection with the Advisor's investment advisory activities on behalf of the
Fund, and the Sub-Advisor is willing to furnish such services to the Advisor and
the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-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 Sub-Advisor to manage the investment and reinvestment of that
portion of the assets of the Fund allocated to it by the Advisor (which portion
may be changed by the Advisor by not less than ten days prior written notice)
(the said portion, as it may be changed from time to time, being herein called
the "Fund 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 Sub-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 compensation herein provided. The Sub-Advisor shall at all
times maintain its registration as an investment advisor under the Investment
Advisers Act of 1940 and shall otherwise comply in all material respects with
all applicable laws and regulations, both state and federal. The Sub-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 Fund.
2. DUTIES OF THE SUB-ADVISOR. The Sub-Advisor will provide the
following services and undertake the following duties:
a. The Sub-Advisor will manage the investment and reinvestment
of the assets of the Fund, subject to and in accordance with the investment
objectives, policies and restrictions of the Fund and any written or oral
directions which the Advisor or the Trust's Board of Trustees may give from time
to time with respect to the Fund. In furtherance of the foregoing, the
Sub-Advisor will make all determinations with respect to the investment of the
Fund 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
Sub-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 Sub-Advisor will render regular reports to the
Trust's Board of Trustees, to the Advisor and to BARRA RogersCasey, 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 Sub-Advisor). Such reports
shall be made in such form and manner and with respect to such matters regarding
the Fund and the Sub-Advisor as the Trust, the Advisor or BARRA RogersCasey,
Inc. shall from time to time request; provided, however, that in the absence of
extraordinary circumstances, the individual primarily responsible for management
of Fund Assets for the Sub-Advisor will not be required to attend in person more
than one meeting per year with the trustees of the Trust.
b. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not limited to: (i)
permission to use the Sub-Advisor's name as provided in Section 5, (ii)
permission to use the past performance and investment history of the Sub-Advisor
with respect to a composite of other funds managed by the Sub-Advisor that are
comparable, in investment objective and composition, to the Fund, (iii) access
to the individual(s) responsible for day-to-day management of the Fund for
marketing conferences, teleconferences and other activities involving the
promotion of the Fund, subject to the reasonable request of the Advisor, (iv)
permission to use biographical and historical data of the Sub-Advisor and
individual manager(s), and (v) permission to use the names of those clients
pre-approved by the Sub-Advisor to which the Sub-Advisor provides investment
management services, subject to receipt of the consent of such clients to the
use of their names. The Advisor will not use information about the Sub-Advisor,
including the information described above, with respect to the marketing of the
Fund, or otherwise provide information to third parties, other than such
information that has been either provided to the Advisor by the Sub-Advisor for
this purpose or pre-approved by the Sub-Advisor for this purpose. Within a
reasonable time from the date of initial use, the Advisor will provide to the
Sub-Advisor copies of materials used with respect to marketing the Fund, or
otherwise provided to third parties, that include information about the
Sub-Advisor, other than those materials that include only the Sub-Advisor's name
and no other information about the Sub-Advisor.
c. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions. In connection with the
placement of orders for the execution of portfolio transactions, the Sub-Advisor
will create and maintain all necessary brokerage records of the Fund 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. The Sub-Advisor will present a written report to the Board of Trustees of
the Trust, at least quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such expenses,
broken down by broker-dealer and containing such information as the Board of
Trustees reasonably shall request. The Sub-Advisor shall effect all purchases
and sales of securities in a manner consistent with best execution, taking into
account net price (including commissions) and execution capability and other
services which the broker may provide. In this regard, the Sub-Advisor may
effect transactions which cause the Fund to pay a commission in excess of a
commission which another broker would have charged, provided, however, that the
Sub-Advisor shall have first determined that such commission is reasonable in
relation to the value of the brokerage, research, performance measurement
service and other services performed by the broker.
d. In the event of any change in the ownership of the
Sub-Advisor, or any change in its investment principals primarily responsible
for the management of the Fund Assets under this Agreement the Sub-Advisor shall
give the Advisor and the Trust's Board of Trustees written notice of such change
within a reasonable time (but not later than 30 days) after such change.
e. The Sub-Advisor will bear its expenses of providing services
to the Fund pursuant to this Agreement except such expenses as are undertaken by
the Advisor or the Trust.
f. The Sub-Advisor will 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. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the Sub-Advisor
a monthly fee equal on an annual basis to 0.50% of the average daily net Fund
Assets. Such fee shall be computed and accrued daily. If the Sub-Advisor serves
in such capacity for less than the whole of any period specified in this Section
3a, the compensation to the Sub-Advisor shall be prorated. For purposes of
calculating the Sub-Advisor's fee, the daily value of the Fund Assets shall be
computed by the same method as the Trust uses to compute the net asset value of
the Fund for purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part of
its fees hereunder.
c. The compensation of the Sub-Advisor shall be held in an
interest-bearing escrow account with the Fund's custodian. If a majority of the
Fund's outstanding voting securities approve a sub-advisory agreement with the
Sub-Advisor within 150 days of the effective date of this Agreement, the amount
in the escrow account (including interest earned) shall be paid to the
Sub-Advisor. If a majority of the Fund's outstanding voting securities do not
approve a sub-advisory agreement with the Sub-Advisor within 150 days of the
effective date of this Agreement, the Sub-Advisor shall be paid, out of the
escrow account, the lesser of: (i) any costs incurred in performing its services
under this Agreement (plus interest earned on that amount while in escrow) or
(ii) the total amount in the escrow account (plus interest earned).
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the
Sub-Advisor may perform investment advisory services for various other clients,
including other investment companies. The Sub-Advisor will report to the Board
of Trustees of the Trust (at regular quarterly meetings and at such other times
as such Board of Trustees reasonably shall request, subject to the limitation on
personal attendance at such meetings set forth in Section 2a) (i) the financial
condition and prospects of the Sub-Advisor, (ii) the nature and amount of
transactions affecting the Fund that involve the Sub-Advisor and affiliates of
the Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. The Sub-Advisor
represents that a statement defining its policies with respect to the allocation
of investment opportunity among the Fund and its other clients is included in
Part II of the Sub-Advisor's Form ADV as filed with the SEC.
It is understood that the Sub-Advisor may become interested in the
Trust as a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto and will hereafter supply to
the Advisor, on an annual basis, copies of all amendments or restatements of
such document. Further, the Sub-Advisor will hereafter supply to the Advisor and
the Trust copies of any material amendments of its Form ADV within a reasonable
time period after filing such material amendments with the SEC.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use
the name of the Sub-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 Sub-Advisor; provided, however, that the Sub-Advisor hereby
approves 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 Sub-Advisor shall not use the name of the Advisor or
the Trust in any material relating to the Sub-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 each hereby approve all uses of their respective
names which merely refer in accurate terms to the appointment of the Sub-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.
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
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 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-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 Sub-Advisor agrees
that (i) the Trust's obligations to the Sub-Advisor under this Agreement (or
indirectly under the Advisory Agreement) shall be limited in any event to the
assets of the Fund and (ii) the Sub-Advisor shall not seek satisfaction of any
such obligation from the holders of shares of the Fund nor from any Trustee,
officer, employee or agent of the Trust.
8. FORCE MAJEURE. The Sub-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 Sub-Advisor shall take
reasonable steps to minimize service interruptions but shall have no liability
with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, for a period of no more than 150 days
following the effective date of this Agreement.
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 Fund, in
any such case upon not less than 10 calendar days' prior written notice to the
Sub-Advisor and (ii) by the Sub-Advisor upon not less than 60 days' prior
written notice to the Advisor and the Trust. This Agreement shall terminate
automatically (i) in the event of its assignment or (ii) upon the effective date
of a sub-advisory agreement with the Sub-Adviser that has been approved by a
majority of the Fund's outstanding voting securities within 150 days of the
effective date of this Agreement.
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 the Fund affected by such change.
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.
10. SEVERABILITY. 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.
11. 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 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxx
00000 and that the address of the Sub-Advisor shall be TCW Investment Management
Company, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx
Xxxxxxxxx or Xxxxx Xxxxxxxxxxxx, with copies of all non-routine notices to be
sent also to the Sub-Advisor's General Counsel at 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
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.
Attest: TOUCHSTONE ADVISORS, INC.
BY
----------------------------- Xxxx X. XxXxxxxx, President
Name:
Title:
TCW INVESTMENT MANAGEMENT COMPANY
Attest:
BY
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Name: Name:
Title: Title:
Attest:
BY
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Name: Name:
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Title: Title:
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