EXHIBIT INDEX
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77B. ACCOUNTANT'S REPORT ON INTERNAL CONTROL
77C. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS
77I. TERMS OF NEW OR AMENDED SECURITIES
77K. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
77M. MERGERS
77Q.1. EXHIBITS
Investment Advisory Agreement with Touchstone Advisors, Inc.
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc. for
High Yield Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc. for
Bond Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc. for
Intermediate Term Government Income Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc. for
Short Term Government Income Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc. for
Money Market Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc. for
Institutional Government Income Fund
Agreement and Plan of Reorganization between Registrant, on behalf of the
Intermediate Bond Fund and Touchstone Series Trust, on behalf of the Bond
Fund
<PAGE>
77B. ACCOUNTANT'S REPORT ON INTERNAL CONTROL
ERNST & YOUNG LLP 1300 Chiquita Center Phone 513 621 6454
250 East Fifth Street
Cincinnati, Ohio 45202
Report of Independent Auditors
To the Shareholders and
Board of Trustees of
Touchstone Investment Trust
In planning and performing our audit of the financial statements of Touchstone
Investment Trust for the period ended September 30, 2000, we considered its
internal control, including control activities for safeguarding securities,
in order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on internal control.
The management of Touchstone Investment Trust is responsible for establishing
and maintaining internal control. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. Those controls include the safeguarding of assets
against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, error or fraud may
occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the internal control components does not reduce to a relatively low level the
risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control and its operation, including controls for safeguarding
securities that we consider to be material weaknesses as defined above at
September 30, 2000.
This report is intended solely for the information and use of management, the
Board of Trustees of Touchstone Investment Trust, and the Securities and
Exchange Commission and is not intended to be and should not be used by anyone
other than these specified parties.
/s/ ERNST & YOUNG LLP
Cincinnati, Ohio
November 17, 2000
77C. MATTERS SUBMITTED TO A VOTE OF SECURITY HOLDERS
On April 19, 2000, a Special Meeting of Shareholders was held
in order to approve certain matters in connection with the
consolidation of the Touchstone mutual fund complex and the
Countrywide mutual fund complex. The Trust's shareholders voted to
consider approval of a new investment advisory agreement with
Touchstone Advisors, Inc. and a new sub-advisory agreement with
Fort Washington Investment Advisors, Inc. Shareholders also voted
to ratify the selection of Ernst & Young LLP as the Trust's
independent public accountants.
The shareholders approved all proposals submitted to them for
a vote. The number of votes cast for and against each proposal was
as follows:
PROPOSAL #1. Approval of Investment Advisory Agreement with Touchstone
Advisors, Inc.
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Short Term Government Income Fund
Number of Shares
For Against Abstain
70,438,193.730 403,577.230 700,002.700
Intermediate Term Government Income Fund
Number of Shares
For Against Abstain
1,815,606.930 21,358.125 26,110.338
Money Market Fund
Number of Shares
For Against Abstain
14,043,812.590 417,857.890 610,054.960
Intermediate Bond Fund
Number of Shares
For Against Abstain
297,392.122 5,661.422 4,546.546
Institutional Government Income Fund
Number of Shares
For Against Abstain
42,710,009.930 78,486.000 68,136.780
<PAGE>
PROPOSAL #2. Approval of Sub-Advisory Agreements with Fort Washington
Investment Advisors, Inc.
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Short Term Government Income Fund
Number of Shares
For Against Abstain
70,405,549.050 417,456.840 718,767.770
Intermediate Term Government Income Fund
Number of Shares
For Against Abstain
1,808,876.449 22,032.442 32,166.502
Money Market Fund
Number of Shares
For Against Abstain
13,683,841.650 771,182.670 616,701.120
Intermediate Bond Fund
Number of Shares
For Against Abstain
297,392.122 5,661.422 4,546.546
Institutional Government Income Fund
Number of Shares
For Against Abstain
42,711,422.930 78,486.000 66,723.780
PROPOSAL #3. Approval of Selection of Ernst & Young LLP as Independent Auditors
--------------------------------------------------------------------------------
Short Term Government Income Fund
Number of Shares
For Against Abstain
70,853,399.450 178,092.870 510,281.340
Intermediate Term Government Income Fund
Number of Shares
For Against Abstain
1,822,368.752 18,935.835 21,770.806
Money Market Fund
Number of Shares
For Against Abstain
14,338,307.110 112,941.980 620,476.350
Intermediate Bond Fund
Number of Shares
For Against Abstain
300,402.916 2,246.221 4,950.953
Institutional Government Income Fund
Number of Shares
For Against Abstain
42,783,368.930 6,494.000 66,769.780
<PAGE>
77I. TERMS OF NEW OR AMENDED SECURITIES
On February 15, 2000, the Board of Trustees approved the establishment
of a new series of Registrant, the High Yield Fund. The High Yield Fund seeks to
achieve a high level of income as its main goal by investing primarily in
non-investment grade debt securities of domestic corporations The High Yield
Fund offers Class A and Class C Shares and began operations May 1, 2000.
On March 16, 2000, the Board of Trustees approved the issuance of Class
C Shares of the Intermediate Term Government Income Fund. Class C Shares are
sold with a maximum front-end sales load of 1.25% and a maximum deferred sales
load of 1.00% on shares redeemed within one year of their purchase. The
Intermediate Term Government Income Fund began offering Class C Shares on May 1,
2000. During the period ended September 30, 2000, no Class C Shares of the Fund
were sold.
77K. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On February 15, 2000, the Board of Trustees voted to change the
Registrant's independent public accountants for the fiscal year ending September
30, 2000 from Arthur Andersen LLP to Ernst & Young LLP. On April 19, 2000, the
Registrant's shareholders voted to ratify the selection of Ernst & Young LLP.
During the Registrant's two most recent fiscal years prior to engaging Ernst &
Young, the Registrant did not consult Ernst & Young on any accounting matter.
Moreover, during the Registrant's two most recent fiscal years, there were no
disagreements with Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedures.
77M. MERGERS
On April 19, 2000, shareholders of the Touchstone Bond Fund series of
Touchstone Series Trust approved an Agreement and Plan of Reorganization and
related transactions providing for the transfer of substantially all assets of
the Touchstone Bond Fund into the Intermediate Bond Fund series of Registrant,
in exchange for shares of the Intermediate Bond Fund and the distribution of
these shares to shareholders of the Touchstone Bond Fund.
On February 15, 2000, the Board of Trustees of Touchstone Series Trust
and the Board of Trustees of Registrant approved the Agreement and Plan of
Reorganization between the Touchstone Bond Fund and Registrant providing for the
merger of the Funds. The merger became effective May 1, 2000 and the surviving
fund was renamed the "Bond Fund."
<PAGE>
77Q1. EXHIBITS
INVESTMENT ADVISORY AGREEMENT
TOUCHSTONE INVESTMENT TRUST
INVESTMENT ADVISORY AGREEMENT, dated as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and TOUCHSTONE
INVESTMENT TRUST, a Massachusetts business trust created pursuant to an
Agreement and Declaration of Trust dated December 7, 1980, 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 sub-advisors for any Fund. Any agreement between the
Advisor and a sub-advisor 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 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.
<PAGE>
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.
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; and (x) interest on borrowed money, if any.
<PAGE>
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 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 the Advisor has
reserved for itself the rights to the name "Touchstone Investment 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 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.
<PAGE>
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 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 two
years 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.
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 December 7,
1980, 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 INVESTMENT TRUST
By: /s/ Jill T. McGruder
Title: President
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
Title: President
<PAGE>
SCHEDULE 1
Short Term Government Income Fund
Intermediate Term Government Income Fund
Money Market Fund
Each Fund pays the Advisor a fee equal to the annual rate of 0.50% on the first
$50 million of average daily net assets; 0.45% of the next $100 million of
average daily net assets; 0.40% of the next $100 million of average daily net
assets and 0.375% of such assets in excess of $250 million.
Institutional Government Income Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.20% of average
daily net assets.
Bond Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.50% of average
daily net assets.
High Yield Fund
The Fund pays the Advisor a fee equal to the annual rate of 0.60% of average
daily net assets.
<PAGE>
SUB-ADVISORY AGREEMENT
HIGH YIELD FUND
TOUCHSTONE INVESTMENT TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio 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
Investment Trust (the "Trust"), a Massachusetts business trust organized
pursuant to an Agreement and Declaration of Trust dated December 7, 1980 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 High Yield 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 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
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 and to the Advisor (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 or the Advisor
shall from time to time request.
<PAGE>
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 as the same is applicable 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 clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
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's primary objective shall be 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. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. 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, 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.
d. 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.
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.
<PAGE>
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 0.40% of the
average daily net assets of the Fund. 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's net 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.
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) (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. 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 business among the Fund and its other clients.
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 (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.
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 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 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.
<PAGE>
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 two years from the
date hereof 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
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. 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.
<PAGE>
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 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
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.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
----------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS, INC.
By: /s/ William F. Ledwin
------------------------
Name: William F. Ledwin
Title: President
<PAGE>
SUB-ADVISORY AGREEMENT
BOND FUND
TOUCHSTONE INVESTMENT TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio 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
Investment Trust (the "Trust"), a Massachusetts business trust organized
pursuant to an Agreement and Declaration of Trust dated December 7, 1980 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 Bond 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 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
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 and to the Advisor (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 or the Advisor
shall from time to time request.
<PAGE>
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 as the same is applicable 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 clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
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's primary objective shall be 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. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. 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, 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.
<PAGE>
d. 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.
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 0.30% of the
average daily net assets of the Fund. 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's net 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.
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) (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. 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 business among the Fund and its other clients.
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 (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.
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 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 state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
<PAGE>
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 two years from the
date hereof 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
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.
<PAGE>
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 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
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.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
----------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS, INC.
By: /s/ William F. Ledwin
------------------------
Name: William F. Ledwin
Title: President
<PAGE>
SUB-ADVISORY AGREEMENT
INTERMEDIATE TERM GOVERNMENT INCOME FUND
TOUCHSTONE INVESTMENT TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio 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
Investment Trust (the "Trust"), a Massachusetts business trust organized
pursuant to an Agreement and Declaration of Trust dated December 7, 1980 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 Intermediate Term Government 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 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
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 and to the Advisor (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 or the Advisor
shall from time to time request.
<PAGE>
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 as the same is applicable 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 clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
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's primary objective shall be 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. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. 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, 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.
d. 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.
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.
<PAGE>
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 0.20% of the
average daily net assets of the Fund. 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's net 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.
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) (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. 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 business among the Fund and its other clients.
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 (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.
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 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 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.
<PAGE>
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 two years from the
date hereof 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
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.
<PAGE>
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 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
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.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
----------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS, INC.
By: /s/ William F. Ledwin
------------------------
Name: William F. Ledwin
Title: President
<PAGE>
SUB-ADVISORY AGREEMENT
SHORT TERM GOVERNMENT INCOME FUND
TOUCHSTONE INVESTMENT TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio 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
Investment Trust (the "Trust"), a Massachusetts business trust organized
pursuant to an Agreement and Declaration of Trust dated December 7, 1980 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 Short Term Government 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 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
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 and to the Advisor (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 or the Advisor
shall from time to time request.
<PAGE>
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 as the same is applicable 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 clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
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's primary objective shall be 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. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. 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, 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.
d. 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.
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.
<PAGE>
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 0.15% of the
average daily net assets of the Fund. 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's net 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.
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) (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. 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 business among the Fund and its other clients.
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 (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.
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 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 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.
<PAGE>
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 two years from the
date hereof 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
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.
<PAGE>
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 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
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.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
----------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS, INC.
By: /s/ William F. Ledwin
------------------------
Name: William F. Ledwin
Title: President
<PAGE>
SUB-ADVISORY AGREEMENT
MONEY MARKET FUND
TOUCHSTONE INVESTMENT TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio 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
Investment Trust (the "Trust"), a Massachusetts business trust organized
pursuant to an Agreement and Declaration of Trust dated December 7, 1980 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 Money Market 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 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
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 and to the Advisor (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 or the Advisor
shall from time to time request.
<PAGE>
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 as the same is applicable 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 clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
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's primary objective shall be 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. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. 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, 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.
d. 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.
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.
<PAGE>
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 0.15% of the
average daily net assets of the Fund. 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's net 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.
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) (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. 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 business among the Fund and its other clients.
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 (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.
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 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 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.
<PAGE>
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 two years from the
date hereof 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
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.
<PAGE>
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 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
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.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
----------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS, INC.
By: /s/ William F. Ledwin
------------------------
Name: William F. Ledwin
Title: President
<PAGE>
SUB-ADVISORY AGREEMENT
INSTITUTIONAL GOVERNMENT INCOME FUND
TOUCHSTONE INVESTMENT TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio 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
Investment Trust (the "Trust"), a Massachusetts business trust organized
pursuant to an Agreement and Declaration of Trust dated December 7, 1980 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 Institutional Government 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 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
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 and to the Advisor (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 or the Advisor
shall from time to time request.
<PAGE>
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 as the same is applicable 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 clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
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's primary objective shall be 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. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. 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, 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.
d. 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.
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.
<PAGE>
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 0.05% of the
average daily net assets of the Fund. 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's net 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.
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) (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. 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 business among the Fund and its other clients.
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 (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.
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 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 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.
<PAGE>
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 two years from the
date hereof 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
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. 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.
<PAGE>
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 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
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.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
----------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS, INC.
By: /s/ William F. Ledwin
------------------------
Name: William F. Ledwin
Title: President
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Plan") is made as of this
15th day of February, 2000 by and between Countrywide Investment Trust
("Investment Trust") for itself and on behalf of its series, Intermediate Bond
Fund (hereinafter, the "Acquiring Fund"), and Touchstone Series Trust
("Touchstone Trust ") for itself and on behalf of its series, Touchstone Bond
Fund (hereinafter, the "Acquired Fund").
This Plan governs the proposed issuance of shares of the Acquiring Fund in
exchange for all of the assets and liabilities of the Acquired Fund.
This Plan is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended (the "Code"). A reorganization (each a
"Reorganization") will comprise the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for the Acquiring Fund's
shares and the assumption by the Acquiring Fund of certain liabilities of the
Acquired Fund, and the constructive distribution after the Closing Date (as
hereinafter defined) of such shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund, all upon the terms and conditions hereinafter
set forth in this Plan.
WHEREAS, Investment Trust and Touchstone Trust are each (a) a Massachusetts
business trust duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, and (b) registered as an open-end
series investment company under the Investment Company Act of 1940, as amended(
the "1940 Act"); and the Acquired Fund owns securities which generally are
assets of the character in which the Acquiring Fund is permitted to invest; and
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WHEREAS, effective as of the Closing Date, the shares of beneficial
interest of the Acquiring Fund will consist of two separate classes, designated
as Class A shares of beneficial interest ("Class A") and Class C shares of
beneficial interest ("Class C"). The shares of each class of the Acquiring Fund
(the "Acquiring Class") that the Acquiring Fund will issue to the shareholders
of the corresponding Acquired Fund class (the "Corresponding Acquired Class")
are set forth in the Corresponding Classes Table in Schedule A; and
WHEREAS the Board of Trustees of Touchstone Trust has determined that an
exchange of all of the assets of the Acquired Fund for shares of the Acquiring
Fund and the assumption of the liabilities of the Acquired Fund by the Acquiring
Fund is in the best interests of the Acquired Fund's Shareholders (as defined
below) and that the interests of the existing shareholders of the Acquired Fund
will not be diluted as a result of this transaction; and
WHEREAS, the execution, delivery and performance of this Plan will have
been duly authorized prior to the Closing Date by all necessary action on the
part of Investment Trust and Touchstone Trust, respectively, and this Plan
constitutes a valid and binding obligation of each of the parties hereto
enforceable in accordance with its terms, subject to the requisite approval of
the shareholders of the Acquired Fund.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Transfer of Assets and Liabilities of the Acquired Fund to the
Acquiring Fund in Exchange for the Acquiring Fund's Shares;
Liquidation of the Acquired Fund.
1.1 Transfer and Exchange of Assets for Shares. Subject to the
requisite approval of the shareholders of the Acquired Fund and to the other
terms and conditions set forth herein and on the basis of the representations
and warranties contained herein, Touchstone Bond Fund series of Touchstone Trust
shall transfer to Countrywide Intermediate Bond Fund series of
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Investment Trust, and Countrywide Bond Fund series of Investment Trust shall
acquire from Touchstone Bond Fund series of Touchstone Trust, as of the Closing
Date, all of the Assets (as hereinafter defined) (a) of the Touchstone Bond Fund
in exchange for that number of Acquiring Class shares of Countrywide
Intermediate Bond Fund determined in accordance with Section 2.2 hereof and the
assumption by Countrywide Intermediate Bond Fund of the Liabilities (as
hereinafter defined) of the Touchstone Bond Fund. Such transaction shall take
place at the closing provided for in Article 3 of this Plan (the "Closing").
Touchstone Trust will (a) pay or cause to be paid to Investment Trust
any interest received on or after the Closing Date with respect to the Assets of
each Acquired Fund and (b) transfer to Investment Trust any distributions,
rights, stock dividends or other property received by Touchstone Trust after the
Closing Date as distributions on or with respect to the Assets of the Acquired
Fund. Any such interest, distributions, rights, stock dividends or other
property so paid or transferred or received directly by Investment Trust shall
be allocated by Investment Trust to the account of the Acquiring Fund and the
Acquiring Class that acquired the Assets to which such property relates.
1.2 Description of Assets to be Acquired. The assets of the Acquired
Fund to be acquired by the Acquiring Fund shall consist of all property,
including without limitation, all cash, cash equivalents, securities,
commodities and future interests, receivables (including interest or dividends
receivable), any claims or rights of action or rights to register shares under
applicable securities laws, and other property owned by the Acquired Fund and
any deferred or prepaid expenses shown as an asset on the books of the Acquired
Fund at the Effective Time (the "Assets").
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1.3 Liabilities to be Assumed. The Acquiring Fund shall assume from
the Acquired Fund all liabilities, expenses, costs, charges and reserves of such
Acquired Fund of whatever kind or nature, whether absolute, accrued, contingent
or otherwise, whether or not arising in the ordinary course of business, whether
or not determinable as of the Effective Time and whether or not specifically
referred to in this Plan; provided, however, that it is understood and agreed by
the parties hereto that the Acquired Fund will utilize its best efforts to
discharge all of its known debts, liabilities, obligations and duties (the
"Liabilities") prior to the Effective Time.
1.4 Liquidation of the Acquired Fund. As provided in Section 3.3 of
this Plan, as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), Touchstone Trust will effect the termination and
liquidation of the Acquired Fund in the manner provided in its Declaration of
Trust and in accordance with applicable law. On the Closing Date, the Acquired
Fund will distribute pro rata to its shareholders of record, determined as of
the close of business on the Valuation Date (the "Acquired Fund's
Shareholders"), Acquiring Class shares received by the Acquired Fund pursuant to
Section 1.1 in exchange for each such shareholder's interest in the
Corresponding Acquired Class evidenced by such shareholder's shares of
beneficial interest in the Acquired Fund. Such liquidation and distribution will
be accomplished by opening accounts on the books of the Acquiring Fund in the
names of the Acquired Fund's Shareholders and transferring the shares credited
to the account of the Acquired Fund on the books of the Acquiring Fund. Each
account opened shall represent the respective pro rata number of Acquiring Class
shares due each Acquired Fund Shareholder. Fractional shares of each Acquiring
Class shall be rounded to the nearest thousandth of one share. All
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issued and outstanding shares of each Acquired Fund shall simultaneously be
cancelled on the books of the Acquired Fund.
1.5 No Issuance of Certificates. The Acquiring Fund will not issue
certificates representing its Acquiring Class shares issued in connection with
the exchange described in Section 1.1 hereof.
1.6 Transfer Agent's Records. Ownership of Acquiring Class shares will
be shown on the books of Investment Trust's transfer agent. Acquiring Class
shares will be issued in the manner described in the then-effective Prospectus
and Statement of Additional Information of Investment Trust relating to
Acquiring Class shares.
1.7 Transfer Taxes. Any transfer taxes payable upon the issuance of
Acquiring Class shares in a name other than the registered holder of the shares
on the books of the Acquired Fund as of the time of issuance shall be paid by
the person to whom such shares are to be issued as a condition of such transfer.
1.8 Reporting Responsibilities of the Acquired Fund. Any reporting
obligations relating to the Acquired Fund are and shall remain the
responsibility of Touchstone Trust up to and including the Closing Date and such
later date on which the Acquired Fund is terminated.
1.9 Operating Plan. From and after the Closing Date, the rights and
privileges of the Class A and Class C shares of the Acquiring Fund shall be
determined under the provisions of Massachusetts law, Investment Trust's
Declaration of Trust, as amended from time to time, Investment Trust's Bylaws
and the operating plan adopted by Investment Trust's Board of Trustees which
establishes policies and procedures for allocating income and expenses between
the Acquiring Fund's Class A shares and Class C shares which further defines the
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relative voting rights of the Class A and Class C shares and which otherwise
delineates the relative rights, privileges and liabilities of the Class A and
Class C shares.
1.10 On or before the Closing Date, the Acquired Fund may declare
additional dividends or other distributions in order to distribute substantially
all of its investment company taxable income and net realized capital gain. Any
such distribution is intended to preserve the Acquired Fund's status as
regulated investment company pursuant to Sections 851-855 of the Code.
2. Valuation.
2.1 Net Asset Value of the Acquired Fund. The value of the net assets
to be acquired by the Acquiring Fund hereunder shall be the value of the Assets
of the Acquired Fund, less the Liabilities of the Acquired Fund, and shall be
computed at the time and in the manner set forth in Investment Trust's
then-current Prospectus and Statement of Additional Information on the business
day immediately preceding the Closing Date or such other date as the parties may
agree in writing (such time and date being hereinafter called the "Valuation
Date").
2.2 Exchange Ratio. The number of Acquiring Class shares to be issued
(including fractional shares, if any) in exchange for the Assets of the Acquired
Fund and the assumption of its Liabilities shall be such number of shares of the
corresponding Acquiring Class so that shareholders of each Corresponding
Acquired Class will own shares of the corresponding Acquiring Class equal in
aggregate net asset value to the shares of the Corresponding Acquired Class at
the Closing Date.
2.3 Documentation. All computations of value shall be made by
[Countrywide] in accordance with its regular practice as pricing agent for
Investment Trust. In addition, Touchstone Trust shall furnish to Investment
Trust within 60 days of the Closing Date a
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statement of the Acquired Fund's assets and liabilities as of the Effective
Time, which statement shall be prepared in accordance with generally accepted
accounting principles consistently applied and shall be certified by the
Treasurer of Touchstone Trust. In addition, Touchstone Trust shall supply to
Investment Trust in such form as is reasonably satisfactory to Investment Trust,
a statement of earnings and profits of the Acquired Fund for federal income tax
purposes which may be carried over to the shares of each Acquiring Class as a
result of Section 381 of the Code. This statement shall be provided within 180
days of the Closing Date.
3. Closing and Closing Date.
3.1 Establishment of Closing Dates; Description of Closing. The
"Closing Date" shall be the next full business day following the Valuation Date
or such later date as the parties may agree in writing. All acts taking place at
the Closing shall be deemed to take place simultaneously as of the close of
business on the last business day immediately preceding the Closing Date (the
"Effective Time"), unless otherwise provided. The Closing shall be held on the
Closing Date at 9:00 a.m. at the principal offices of Frost & Jacobs LLP, or
such other time and/or place as the parties may agree.
3.2 Deliveries by Transfer Agent. Investors Bank & Trust Company, as
custodian for Touchstone Trust shall deliver at the Closing a certificate of an
authorized officer stating that: (a) the Acquired Fund's portfolio securities,
cash and any other assets shall have been delivered in proper form to Investment
Trust on the Closing Date; and (b) all necessary taxes, including all applicable
federal and state stock transfer stamps, if any, shall have been paid, or
provision for payment shall have been made in connection with the delivery of
portfolio securities.
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3.3 Closing of New York Stock Exchange. In the event that on the
Valuation Date: (a) the New York Stock Exchange is closed to trading or trading
thereon is restricted; or (b) trading or the reporting of trading on said
Exchange or elsewhere is disrupted so that accurate appraisal of the value of
the total net assets of the Acquired Fund is impracticable, then the Closing
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
3.4 List of the Acquired Fund's Shareholders. Touchstone Trust shall
deliver at the Closing a list of names and addresses of the shareholders of the
Acquired Fund and the class, number and percentage ownership of outstanding
shares owned by each such shareholder, all as of the Effective Time, certified
by the Secretary or Assistant Secretary of Touchstone Trust. Investment Trust
shall issue and deliver to said Secretary or Assistant Secretary of Touchstone
Trust a confirmation evidencing Acquiring Class shares to be credited to the
Acquired Fund as soon as practicable after the Closing, or provide other
evidence satisfactory to Touchstone Trust that such Acquiring Class shares have
been credited to the account of the Acquired Fund on the records of Investment
Trust's transfer agent maintained with respect to the Acquiring Class shares. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, receipts or other transfer documents as such
other party may reasonably request.
4. Representations and Warranties.
4.1 Touchstone Trust, on behalf of the Acquired Fund, represents and
warrants to Investment Trust, on behalf of the Acquiring Fund, as follows:
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(a) Touchstone Trust is a voluntary association with transferable
shares of the type commonly referred to as a Massachusetts business trust, duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts;
(b) Touchstone Trust is registered as an investment company
classified as a management company of the open-end type and its registration
with the Securities and Exchange Commission (the "Commission") as an investment
company under the 1940 Act is in full force and effect;
(c) The current prospectus and statement of additional
information of Touchstone Trust relating to the Acquired Fund conform in all
material respects to the applicable requirements of the Securities Act of 1933,
as amended (the "1933 Act"), and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(d) Touchstone Trust is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of its
Declaration of Trust or By-Laws, as each may have been amended to the date
hereof, or of any agreement, indenture, instrument, contract, lease or other
undertaking to which Touchstone Trust is a party or by which it is bound;
(e) Touchstone Trust has no material contracts or other
commitments (other than this Agreement) which, if terminated prior to the
Closing Date, would result in an additional liability of the Acquired Fund;
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(f) No litigation or administrative proceedings or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against Touchstone Trust or the Acquired Fund or any of
their respective properties or assets which, if adversely determined, would
materially and adversely affect their financial condition or the conduct of
their business. Touchstone Trust knows of no facts which might form the basis
for the institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially or adversely affects its business or its ability to consummate
the transactions herein contemplated.
(g) At the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law to have been filed by such date
shall have been filed, and all federal and other taxes shall have been paid so
far as due, or provisions shall have been made for the payment thereof and, to
the best of Touchstone Trust's knowledge, no such return is currently under
audit and no assessment has been asserted with respect to such returns;
(h) Touchstone Trust's Financial Statements, copies of which have
been previously delivered to Investment Trust, fairly present the financial
positions of the Acquired Fund as of the Fund's most recent fiscal year-end and
the results of the Fund's operations and changes in the Fund's net Assets for
the periods indicated. Touchstone Trust's Financial Statements are in accordance
with generally accepted accounting principals consistently applied. For purposes
of this Agreement, the Financial Statements include the audited financial
statements of the Acquired Fund for its most recently completed fiscal year and,
if applicable, the un-audited financial statements of the Acquired Fund for its
most recently completed semi-annual period.
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(i) For each fiscal year of its operation, the Acquired Fund has
(i) met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and (ii) been treated as a separate
corporation for federal income tax purposes pursuant to Section 851(g) of the
Code, and the Acquired Fund intends to be so treated as a separate corporation
and meet such qualification requirements for its current taxable year;
(j) All issued and outstanding shares of the Acquired Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable with no personal liability attaching to the ownership
thereof (recognizing that, under Massachusetts law, the Acquired Fund's
Shareholders could, under certain circumstances, be held personally liable for
obligations of the Acquired Fund);
(k) At the Closing Date, Touchstone Trust, on behalf of the
Acquired Fund, will have good and marketable title to the Assets to be
transferred to the Acquiring Fund pursuant hereto and full right, power and
authority to sell, assign, transfer and deliver such Assets hereunder and, upon
delivery and payment for such Assets, the Acquiring Fund will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933 Act, other
than as disclosed to the Acquiring Fund.
(l) The execution, delivery and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action on the
part of Touchstone Trust's Board of Trustees, and on the date hereof and on the
Closing Date this Agreement will constitute a valid and binding obligation of
Touchstone Trust on behalf of the Acquired Fund enforceable against Touchstone
Trust in accordance with its terms, subject as to enforcement to
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bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights and to general principles of equity;
(m) On the Closing Date, the performance of this Agreement shall
have been duly authorized by all necessary action by the shareholders of the
Acquired Fund.
(n) Since the date of Touchstone Trust's Financial Statements,
there has been no material adverse change in the financial condition, result of
operations, business, properties or Assets of the Acquired Fund.
4.2 Investment Trust, on behalf of the Acquiring Fund, represents and
warrants to Touchstone Trust on behalf of the Acquired Fund as follows:
(a) Investment Trust is a voluntary association with transferable
shares of the type commonly referred to as a Massachusetts business trust, duly
organized, validly existing in good standing under the laws of the Commonwealth
of Massachusetts;
(b) Investment Trust is registered as an investment company
classified as a management company of the open-end type and its registration
with the Commission as an investment company under the 1940 Act, is in full
force and effect;
(c) The current prospectus and statement of additional
information of Investment Trust relating to the Acquiring Fund conform in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and do not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(d) Investment Trust is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of its
Declaration of Trust
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or Bylaws, as each may have been amended to the date hereof, or of any
agreement, indenture, instrument, contract, lease or other undertaking to which
Investment Trust is a party or by which it is bound;
(e) Investment Trust has no material contracts or other
commitments (other than by this Agreement) which, if terminated prior to the
Closing Date, would result in an additional liability of the Acquiring Fund;
(f) No litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against Investment Trust or the Acquiring Fund or any of
their respective properties or assets which, if adversely determined, would
materially and adversely affect their financial condition or the conduct of
their business. Investment Trust knows of no facts which might form the basis
for the institution of such proceedings and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially or adversely affects its business or its ability to consummate
the transactions herein contemplated;
(g) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law to have been filed by such date
shall have been filed, and all federal and other taxes shall have been paid so
far as due, or provision shall have been made for the payment thereof and, to
the best of Investment Trust's knowledge, no such return is currently under
audit and no assessment has been asserted with respect to such returns;
(h) For each fiscal year of its operation, the Acquiring Fund has
(i) met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and (ii) been treated as a separate
corporation for federal income tax
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purposes pursuant to Section 851(g) of the Code, and the Acquiring Fund intends
to be so treated as a separate corporation and meet such qualification
requirements for its current taxable year;
(i) All issued and outstanding shares of the Acquiring Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable with no personal liability attaching to the ownership
thereof (recognizing that, under Massachusetts law, the Acquiring Fund's
Shareholders could, under certain circumstances, be held personally liable for
obligations of the Acquiring Fund);
(j) The execution, delivery and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action on the
part of the Investment Trust's Board of Trustees, and on the date hereof and on
the Closing Date this Agreement will constitute a valid and binding obligation
of Investment Trust on behalf of the Acquiring Fund enforceable against
Investment Trust in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general principles of equity.
(k) Investment Trust's Financial Statements, copies of which have
been previously delivered to Touchstone Trust, fairly present the financial
positions of the Acquiring Fund as of the Fund's most recent fiscal year-end and
the results of the Fund's operations and changes in the Fund's net Assets for
the periods indicated. Investment Trust's Financial Statements are in accordance
with generally accepted accounting principals consistently applied. For purposes
of this Agreement, the Financial Statements include the audited financial
statements of the Acquiring Fund for its most recently completed fiscal year
and, if applicable, the un-audited financial statements of the Acquiring Fund
for its most recently completed semi-annual period.
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(l) Since its most recent fiscal year-end, there has been no
material adverse change in the financial condition, business, properties or
Assets of the Acquiring Fund.
5. Conditions Precedent to Obligations of the Parties.
5.1 Representations and Warranties. All representations and warranties
of each of Investment Trust and Touchstone Trust set forth herein shall be true
and correct in all material respects as of the date hereof and, except as may be
affected by the transactions contemplated by this Plan, as of the Effective Time
with the same force and effect as if made on and as of the Effective Time.
5.2 Approval of Plan by the Acquired Fund's Shareholders. This Plan
and the transactions contemplated hereby shall have been approved by the
requisite vote of the holders of the outstanding shares of the Acquired Fund in
accordance with the provisions of the law of business trusts of the Commonwealth
of Massachusetts, the provisions of the 1940 Act and the provisions of
Touchstone Trust's Declaration of Trust and By-laws;
5.3 No Adverse Actions. On the Closing Date, no action, suit or other
proceeding shall be pending before any court or governmental agency in which it
is sought to restrain or prohibit or obtain damages or other relief in
connection with this Plan or the transactions contemplated hereby;
5.4 Consents and Approvals.
(a) All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities (including those
of the Commission and of state securities authorities, including "no-action"
positions of such federal or state authorities) deemed necessary by Investment
Trust or Touchstone Trust to permit consummation, in all material respects, of
the transactions contemplated hereby, shall have been obtained, except
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where failure to obtain any such consent, order or permit would not involve a
risk of a material adverse effect on the assets or properties of the Acquired
Fund or the Acquiring Fund, provided that either party hereby may for itself
waive any such conditions; and
(b) The Board of Trustees of Investment Trust and Touchstone
Trust shall have approved the terms of the Reorganization and this Plan and
shall have determined that (i) participation by the Acquiring Fund and the
Acquired Fund, respectively, in the Reorganization is in the best interests of
such funds, (ii) the interests of existing shareholders of each of the Acquiring
Fund and the Acquired Fund, respectively, will not be diluted as a result of the
Reorganization, (iii) the terms of the Reorganization, including the
consideration to be paid or received, are reasonable and fair and do not involve
overreaching on the part of any person, and (iv) the Reorganization is
consistent with the policies of Investment Trust and Touchstone Trust,
respectively, as recited in its respective registration statement and reports
filed under the 1940 Act.
5.5 Effectiveness of Registration Statement on Form N-14; Exemptive
Order. A Registration Statement on Form N-14 relating to the Acquiring Class
shares issuable hereunder, including the combined Proxy Statement of the
Acquired Fund and the Prospectus of Investment Trust (relating to the Acquiring
Class shares issuable pursuant to the terms of this Plan) constituting a part
thereof, shall have become effective under the 1933 Act and no stop order
suspending the effectiveness thereof shall have been issued and, to the best
knowledge of the parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or contemplated under the
1933 Act. Additionally, in response to an application for exemption to be
submitted by Investment Trust, Touchstone Trust and certain affiliated persons,
the Commission shall have issued an order exempting Investment Trust,
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Touchstone Trust and the other applicants from certain provisions of the 1940
Act or the issues raised in the application shall have otherwise been resolved
to the mutual satisfaction of the parties.
5.6 Tax Opinions. Each of Investment Trust and Touchstone Trust shall
have obtained an opinion of Frost & Jacobs LLP, legal counsel to Investment
Trust and Touchstone Trust, in form and substance reasonably satisfactory to
their respective Boards, to the effect that:
(a) The transfer of all of the Acquired Fund's Assets solely in
exchange for the Acquiring Class shares and the assumption by the Acquiring Fund
of the Liabilities of the Acquired Fund, and the distribution of such Acquiring
Class shares to the shareholders of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368 (a)(1)(C) of the Code and the
Acquiring Fund and the Acquired Fund are each a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund upon
the transfer of the Acquired Fund's Assets to the Acquiring Fund in exchange for
the Acquiring Class shares and the assumption by the Acquiring Fund of the
Liabilities of the Acquired Fund or upon the distribution (whether actual or
constructive) of the Acquiring Class shares to the Acquired Fund's Shareholders
in exchange for their shares of the Acquired Fund;
(c) The tax basis of the Acquired Fund's Assets acquired by the
Acquiring Fund will be the same to the Acquiring Fund as the tax basis of such
Assets to the Acquired Fund immediately prior to the Reorganization, and the
holding period of the Assets of the Acquired Fund in the hands of the Acquiring
Fund will include the period during which those assets were held by the Acquired
Fund;
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(d) No gain or loss will be recognized by the Acquiring Fund upon
the receipt of the Assets of the Acquired Fund solely in exchange for the
Acquiring Class shares and the assumption by the Acquiring Fund of the
Liabilities of the Acquired Fund;
(e) No gain or loss will be recognized by shareholders of the
Acquired Fund upon the distribution of the Acquiring Class shares to such
shareholders, provided such shareholders receive solely such Acquiring Class
shares (including fractional shares) in exchange for their Corresponding
Acquired Class shares; and
(f) The aggregate tax basis for the Acquiring Class shares,
including any fractional shares, received by each shareholder of the Acquired
Fund pursuant to the Reorganization will be the same as the aggregate tax basis
of the Corresponding Acquired Class shares held by such shareholder immediately
prior to the Reorganization, and the holding period of the Acquiring Class
shares, including any fractional shares, to be received by each shareholder of
the Acquired Fund will include the period during which the Corresponding
Acquired Class shares exchanged therefor were held by such shareholder (provided
that the Corresponding Acquired Class shares were held as a capital asset on the
date of the Reorganization).
6. Expenses.
The expenses incurred in connection with the entering into and
carrying out the provisions of this Plan will be borne and paid by Touchstone
Advisors, Inc., and not by the Acquiring Fund or the Acquired Fund.
7. Termination.
7.1 Mutual Agreement. This Plan may be terminated by the mutual
agreement of Investment Trust and Touchstone Trust.
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7.2 Material Breach. In addition, either Investment Trust or
Touchstone Trust may, at its option, terminate this Plan at or prior to the
Closing Date on account of a material breach by the other of any agreement
contained herein to be performed by such other party at or prior to the Closing
Date.
7.3 Failure of Condition Precedent. In addition, either Investment
Trust or Touchstone Trust may, at its option, terminate this Plan at or prior to
the Closing Date on account of a condition herein expressed to be precedent to
the obligation of such party which has not been met and which appears cannot
reasonably, or will not, be met.
7.4 Effects of Termination. In the event of any such termination,
there shall be no liability for damage on the part of Investment Trust or
Touchstone Trust or their respective Trustees or officers.
8. Limitation on Liabilities. The obligations of Investment Trust,
Touchstone Trust and each Fund shall not bind any of the trustees, shareholders,
nominees, officers, agents, or employees of Investment Trust or Touchstone Trust
personally, but shall bind only the Assets and property of the Acquiring Fund
and the Acquired Fund. The execution and delivery of this Plan by the parties'
officers shall not be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the Assets
and the property of the Acquiring Fund or the Acquired Fund, as appropriate.
<PAGE>
19
9. Amendment.
This Plan may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties hereto; provided, however,
that following the meeting of the shareholders of the Acquired Fund described in
Section 5.2 of this Plan, no such amendment may have the effect of changing the
provisions for determining the number of shares of each corresponding Acquiring
Class shares to be issued to an Acquired Fund's Shareholders under this Plan to
the detriment of such shareholders without their further approval.
10. Miscellaneous.
10.1 Headings. The section headings contained in this Plan will have
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
10.2 Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
executed on its behalf by its duly authorized officer as of the day and year
first written above.
TOUCHSTONE SERIES TRUST
By:/s/ Jill T. McGruder
---------------------------------
Jill T. McGruder, President
COUNTRYWIDE INVESTMENT TRUST
By:/s/ Robert H. Leshner
---------------------------------
Robert H. Leshner, President
20
TOUCHSTONE ADVISORS, INC.
(SOLELY TO EVIDENCE ITS CONCURRENCE
WITH SECTION 6 HEREOF)
By:/s/ Jill T. McGruder
---------------------------------
Jill T. McGruder, President
21
