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Exhibit (d5)
SUB-ADVISORY AGREEMENT
TOUCHSTONE GROWTH & INCOME FUND
TOUCHSTONE SERIES TRUST
This SUB-ADVISORY AGREEMENT is made as of January 1, 1999, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and XXXXXXX
XXXXXX INVESTMENTS, INC., a Delaware 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
Series Trust (formerly Select Advisors Trust A) (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 to the Touchstone Growth & Income 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 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 those assets of the
Fund allocated to it by the Advisor (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 Advisor hereby represents that (i)
it has authority under the Advisory Agreement to appoint the Sub-Advisor to act
as an investment advisor to the Trust, and (ii) this Agreement is valid and
binding upon the Advisor. 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
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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 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 assets
of the Fund 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
reasonably request.
b. The Sub-Advisor shall provide support to the Advisor with respect
to the marketing of the Fund in a manner comparable to the support provided
to comparable clients of the Sub-Advisor, including but not limited to: (i)
permission to use the Sub-Advisor's name as provided in Section 6, (ii)
permission to use the past performance and investment history of the
Sub-Advisor as the same is applicable to the Fund, 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 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) with respect to clients whose names are
provided to the Advisor by the Sub-Advisor in writing prior to use,
permission to use the names of these clients, subject to any restrictions
imposed by clients on the use of such names or by the Investment Advisors
Act of 1940 and the rules adopted thereunder.
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c. The Sub-Advisor will, in the name of the Fund, 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
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. When placing orders with
brokers and dealers, the Sub-Advisor shall seek to obtain the most
favorable price and execution available for the Fund, and in placing such
orders the Sub-Advisor may consider a number of factors, including, without
limitation, the overall direct net economic result to the Fund (including
commissions, which may not be the lowest available but ordinarily should
not be higher than the generally prevailing competitive range), 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 Sub-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 Sub-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 Sub-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
Sub-Advisor's overall responsibilities with respect to discretionary
accounts that it manages, and that the Fund derives or will derive a
reasonably significant benefit from such research services. The Sub-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 containing such information as the Board of
Trustees reasonably shall request.
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d. The Sub-Advisor may execute standard account documentation,
agreements, contracts and other documents (collectively, the "Account
Documents") as the Sub-Advisor may be requested by brokers, dealers,
counterparties and other persons in connection with the Sub-Advisor's
management of the Fund Assets, provided that the Advisor and the Trust's
Board of Trustees first authorize the Sub-Advisor to execute Account
Documents. In such respect, and only for this limited purpose, the
Sub-Advisor 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, Xxxxxxx Investor Services, Inc. or its successor ("SIS"), an affiliate
of the Sub-Advisor, may act as the regular broker for the Fund 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 Fund. SIS may effect securities
transactions for the Fund 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 Sub-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 Fund 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
Fund is concerned.
g. The Sub-Advisor may enter into arrangements with other persons
affiliated with the Sub-Advisor for the provision of certain personnel and
facilities to the Sub-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
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-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 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.
j. The Sub-Advisor will manage the Fund 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 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 first
$150 million of the average daily net assets of the Combined Funds, and
0.45% of such average daily net assets in excess of $150 million.
b. "Combined Funds," for purposes of this Section 3, means the
combined assets of the Fund and the Touchstone Growth & Income Fund of the
Touchstone Variable Series Trust, to which the Sub-Advisor also acts as an
investment advisor.
c. The fee of the Sub-Advisor hereunder shall be computed and accrued
daily and paid monthly. If the Sub-Advisor serves in such capacity for less
than the whole of any period specified in this Section 3a, the fee to the
Sub-Advisor shall be prorated. For purposes of calculating the
Sub-Advisor's fee, the daily value of the Combined Funds shall be computed
by the same method as the Trust and the Touchstone Variable Series Trust
use, respectively, to compute the net asset value of each such Fund for
purposes of purchases and redemptions of interests thereof.
d. The Sub-Advisor reserves the right to waive all or a part of its
fees hereunder.
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. Furthermore, it is understood that the Sub-Advisor
may give
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advice, and take action, with respect to its other clients that may differ from
the advice given, or the time and nature of the action taken, with respect to
the Fund. 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) (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 performance of other
comparable accounts to whom the Sub-Advisor provides services 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 agrees, on an ongoing basis,
to notify the Advisor of any change in the individual(s) responsible for
day-to-day management of the Fund and any material change in the investment
strategies employed by the Sub-Advisor in managing the Fund. At least annually,
the Sub-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 Sub-Advisor agrees to
submit to the Trust a statement defining its policies with respect to the
allocation of investment opportunities among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the Trust as
an interest holder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-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 Sub-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 Sub-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 Sub-Advisor of its duties and
obligations under this Agreement. The Sub-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 xxxxxxx xxxxxxx and (ii)
thereafter supply to Advisor copies of any amendments to or restatements of such
Code of Ethics or xxxxxxx xxxxxxx policies. The Sub-Advisor agrees to provide
the Advisor, on a quarterly basis, a report with respect to material violations
of the
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Sub-Advisor's Code of Ethics or xxxxxxx xxxxxxx policies by portfolio managers
who have responsibility for managing the Fund or a written statement indicating
that no such violations have occurred during the quarter. In addition, the
Sub-Advisor agrees to provide to the Advisor such other information concerning
violations of its Code of Ethics or xxxxxxx xxxxxxx policies to the same extent
that 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
Sub-Advisor's fulfillment of its obligations under this Agreement, the Advisor
agrees (i) promptly to provide the Sub-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
Sub-Advisor expressly in writing of each change in the fundamental and
nonfundamental investment policies of the Fund, (iii) to provide or cause to be
provided to the Sub-Advisor on an ongoing basis such assistance as may
reasonably be requested by the Sub-Advisor in connection with its activities
under this Agreement, including, without limitation, information concerning the
Fund, its available funds, or funds that may reasonably become available for
investment, and information as to the general condition of the Fund's affairs,
(iv) to provide or cause to be provided to the Sub-Advisor on an ongoing basis
such information as is reasonably requested by the Sub-Advisor for performance
by the Sub-Advisor of its obligations under this Agreement and the Sub-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 Sub-Advisor's reliance on the information most recently furnished to the
Sub-Advisor, and (v) promptly to provide the Sub-Advisor with any guidelines and
procedures applicable to the Sub-Advisor or the Fund 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 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 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
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 shall each 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
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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
Sub-Advisor.
7. 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 holder of an interest
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. The Sub-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 Fund is not a result of the
willful misconduct, bad faith or gross negligence in the performance of, or
reckless disregard of, the duties of the Sub-Advisor under this Agreement. As
used in this Section 7, 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.
8. 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.
9. 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.
10. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided, until December 31, 1999; 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 Fund or by vote of a majority of the Trust's Board of Trustees and (ii)
by the
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vote of a majority of the Trustees who are not parties to this Agreement or
interested persons of either the Advisor or the Sub-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, 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 60 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 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 Fund by February 4,
1999, 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 this 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 Fund 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.
11. 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.
12. 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,
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it is agreed that the address of the Trust and that of the Advisor for this
purpose shall be 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000 and that the address of
the Sub-Advisor shall be 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
13. 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, 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 ______________________________
Xxxxxx X. Xxxxxxx, Xx.
Name:___________________________ President
Title:__________________________
XXXXXXX XXXXXX INVESTMENTS, INC.
Attest:
_________________________________ BY_______________________________
Name:____________________________ Name:____________________________
Title:___________________________ Title:___________________________
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