Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
Countrywide Strategic Trust
- ------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
---------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
--------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
COUNTRYWIDE STRATEGIC TRUST
312 WALNUT STREET, 21ST FLOOR
CINCINNATI, OHIO 45202
March __, 2000
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Countrywide Strategic Trust to be held on Wednesday, April 19, 2000 at 10:00
a.m., Eastern time, at the Trust's offices at 312 Walnut Street, 21st Floor,
Cincinnati, Ohio 45202.
As you may recall, on October 29, 1999 all of the stock of Countrywide
Investments, the Trust's investment adviser, was purchased by Fort Washington
Investment Advisors. Fort Washington Investment Advisors is a member of The
Western-Southern Enterprise, a dynamic group of financial services companies
owned by The Western and Southern Life Insurance Company. Fort Washington
Investment Advisors is a registered investment advisor and the sub-advisor to
several funds in the Touchstone mutual fund complex. Another member of The
Western-Southern Enterprise is Touchstone Advisors, a registered investment
advisor and the investment advisor to all funds in the Touchstone mutual fund
complex.
The Board of Trustees of Countrywide Strategic Trust has approved a series
of transactions designed to consolidate the Touchstone and Countrywide mutual
fund complexes. These transactions include appointing Touchstone Advisors to
serve as the investment advisor to each Fund in the Trust and appointing Fort
Washington Investment Advisors to serve as the sub-advisor for the Utility Fund
and the Equity Fund. Due to the change in investment advisor, the Board has also
approved new sub-advisory agreements between Touchstone Advisors and
Mastrapasqua & Associates, the sub-advisor to the Growth/Value Fund and the
Aggressive Growth Fund. The appointment of a new investment advisor and a
sub-advisor will not result in an increase in advisory fees, nor will it result
in a change in the personnel currently responsible for the day-to-day management
of the Funds. The Board has also approved a change in the independent public
accountants for the Trust.
The Investment Company Act requires that shareholders approve the proposed
advisory and sub-advisory agreements. The Investment Company Act also requires
that shareholders approve the proposed change in independent public accountants.
Accordingly, you are being asked to vote on these 3 matters.
The Board of Trustees has given full and careful consideration to each of
these matters and has concluded that the proposals are in the best interests of
each Fund and its shareholders. The Board of Trustees therefore recommends that
you vote "FOR" the matters discussed in this proxy statement.
Continued on next page
<PAGE>
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE MEETING,
PLEASE VOTE BY SIGNING AND DATING THE ENCLOSED PROXY AND RETURNING IT PROMPTLY
IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING. YOU CAN ALSO VOTE BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS ON THE
ENCLOSED PROXY. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
YOUR SHARES IN PERSON.
Very truly yours,
Robert H. Leshner
President
<PAGE>
COUNTRYWIDE STRATEGIC TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 19, 2000
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of
Countrywide Strategic Trust (the "Trust"), will be held at the Trust's office at
312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202, on Wednesday, April 19,
2000 at 10:00 a.m., Eastern time, to consider and vote on the following matters:
1. Approval of a new investment advisory agreement for each Fund of the
Trust with Touchstone Advisors, Inc. to become effective on May 1,
2000. NO FEE INCREASE IS PROPOSED.
2. (UTILITY FUND AND EQUITY FUND) Approval of a new sub-advisory
agreement with Fort Washington Investment Advisors to become effective
on May 1, 2000.
(GROWTH/VALUE FUND AND AGGRESSIVE GROWTH FUND) Approval of a new
sub-advisory agreement with Mastrapasqua & Associates to become
effective on May 1, 2000. THE FUNDS DO NOT PAY ANY FEES UNDER THESE
AGREEMENTS
3. Approval of the termination of the employment of the Trust's current
independent public accountants and the selection of Ernst & Young LLP
as the Trust's independent public accountants for the fiscal year
ending March 31, 2000.
4. To transact any other business, not currently contemplated, that may
properly come before the meeting in the discretion of the proxies or
their substitutes.
Shareholders of record at the close of business on February 28, 2000 are
entitled to notice of and to vote at this meeting or any adjournment thereof.
By order of the Board of Trustees,
Tina D. Hosking
Secretary
March ____, 2000
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE VOTE BY SIGNING AND DATING
THE ENCLOSED PROXY AND RETURNING IT IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE MEETING. YOU CAN ALSO VOTE BY PHONE BY FOLLOWING
THE INSTRUCTIONS ON THE ENCLOSED PROXY. IF YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
COUNTRYWIDE STRATEGIC TRUST
312 WALNUT STREET, 21ST FLOOR
CINCINNATI, OHIO 45202
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 19, 2000
-------------------
PROXY STATEMENT
-------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Countrywide Strategic Trust (the "Trust")
for use at the special meeting of shareholders to be held at 10:00 a.m. on
Wednesday, April 19, 2000, and at any adjournment(s) thereof. This proxy
statement and form of proxy were first mailed to shareholders on or about
_________, 2000.
The Board of Trustees of the Trust has approved a series of transactions
designed to consolidate the Touchstone and Countrywide mutual fund complexes.
These transactions include appointing Touchstone Advisors, Inc. to serve as the
investment advisor to each Fund in the Trust and appointing Fort Washington
Investment Advisors, Inc. to serve as the sub-advisor to the Utility Fund and
the Equity Fund. The appointment of a new investment advisor and a sub-advisor
will not result in an increase in advisory fees, nor will it result in a change
in the personnel currently responsible for the day-to-day management of the
Funds. The Board has also approved a change in the independent public
accountants for the Trust. Therefore, you are being asked to consider the
following proposals:
1. Approval of a new investment advisory agreement for each Fund of the
Trust with Touchstone Advisors, Inc. to become effective May 1, 2000.
2. Approval of a new sub-advisory agreement for the Utility Fund and the
Equity Fund of the Trust with Fort Washington Investment Advisors,
Inc. to become effective May 1, 2000.
Approval of a new sub-advisory agreement for the Growth/Value Fund and
the Aggressive Growth Fund of the Trust with Mastrapasqua &
Associates, Inc. to become effective May 1, 2000.
3. Approval of the termination of the employment of the Trust's current
independent public accountants and the selection of Ernst & Young LLP
as the Trust's independent public accountants for the fiscal year
ending March 31, 2000.
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A copy of the Trust's annual report for the fiscal year ended March 31,
1999, including financial statements and schedules, is available at no charge by
making a written request directed to Ms. Tina D. Hosking, Secretary, Countrywide
Strategic Trust, 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202-4094, or
by calling the Trust nationwide toll-free at 800-543-0407 or in Cincinnati at
(513) 629-2050.
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PROPOSAL 1
NEW ADVISORY AGREEMENT WITH TOUCHSTONE ADVISORS
BACKGROUND
- ----------
Countrywide Investments, Inc. currently serves as the investment advisor to
each series of the Trust. Countrywide Investments is a wholly-owned subsidiary
of Countrywide Financial Services, Inc., which is a wholly-owned subsidiary of
Fort Washington Investment Advisors.
Touchstone Advisors currently serves as the investment advisor to each
series of Touchstone Series Trust and to each series of Touchstone Variable
Series Trust. Touchstone Advisors is a indirect wholly-owned subsidiary of
Western-Southern Life Assurance Company, which is a wholly-owned subsidiary of
The Western and Southern Life Insurance Company.
Fort Washington Investment Advisors currently serves as sub-advisor to 4
series of Touchstone Investment Trust and 4 series of Touchstone Variable Series
Trust. Fort Washington Investment Advisors is a wholly-owned subsidiary of The
Western and Southern Life Insurance Company.
As part of a consolidation of the Touchstone and Countrywide mutual fund
complexes, management of Countrywide Investments, Touchstone Advisors and Fort
Washington Investment Advisors has proposed a reorganization plan. Under the
reorganization plan, Touchstone Advisors will serve as the investment advisor
for each Fund in the Countrywide complex and Fort Washington Investment Advisors
will serve as the sub-advisor for each Fund in the Countrywide complex, except
for the Growth/Value Fund and the Aggressive Growth Fund, which already have a
sub-advisor. Countrywide Investments will no longer serve as the investment
advisor to any Fund in the Countrywide complex, but the employees of Countrywide
Investments who currently provide investment advisory services to the Funds will
continue to do so in their capacity as employees of Fort Washington Investment
Advisors.
THE PRESENT ADVISORY AGREEMENTS
- -------------------------------
Countrywide Investments, 312 Walnut Street, Cincinnati, Ohio 45202
currently provides investment advisory services to the Trust. It has entered
into a separate management agreement with each series of the Trust (the "Present
Advisory Agreements"), including:
Utility Fund
Equity Fund
Growth/Value Fund
Aggressive Growth Fund
The Present Advisory Agreements for the Utility Fund and the Equity Fund
are substantially identical to each other in all respects. The Present Advisory
Agreements for the Utility Fund and the Equity Fund require Countrywide
Investments to furnish an investment program for each Fund and to determine
which securities to purchase and sell and what portion of a Fund's assets to
keep uninvested. The Present Advisory Agreements for the Growth/Value Fund and
the Aggressive Growth Fund are substantially identical to each other in all
respects. The Present Advisory Agreements for the Growth/Value Fund and the
Aggressive Growth Fund require Countrywide Investments to supervise the general
management and investment of the assets of the Funds and to provide overall
investment strategies for the Funds. The Present Advisory Agreements for the
Growth/Value Fund and the Aggressive Growth Fund permit Countrywide Investments
to appoint a sub-advisor to make investment decisions for the Funds.
The Present Advisory Agreements were last approved by the Board of
Trustees, including a majority of the Trustees who are not interested persons,
as defined in the Investment Company Act of 1940 as amended, of the Trust
(the "Independent Trustees") on September 8, 1999. Each of the Present Advisory
Agreements was last approved by shareholders of the applicable Fund on
October 27, 1999 and became effective on October 29, 1999. The Present
Advisory Agreements were submitted to shareholders of the Funds in 1999
in connection with the acquisition of Countrywide Investments by Fort
Washington Investment Advisors.
During the fiscal year ended March 31, 1999, the Funds paid to Countrywide
Investments advisory fees as shown in the table below.
Utility Fund $326,576
Equity Fund $375,212
Growth/Value Fund $254,571
Aggressive Growth Fund $125,575
THE NEW ADVISORY AGREEMENT
- --------------------------
Under the reorganization plan, the Trust, on behalf of each Fund, will
enter into a new investment advisory agreement with Touchstone Advisors (the
"New Advisory Agreement"). The New Advisory Agreement appoints Touchstone
Advisors 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. The New
Advisory Agreement authorizes Touchstone Advisors to employ, at its own expense,
one or more sub-advisors for any Fund. Touchstone Advisors intends to enter into
sub-advisory agreements with Fort Washington Investment Advisors, on behalf of
the Utility Fund and the Equity Fund, and sub-advisory agreements with
Mastrapasqua & Associates, on behalf of the Growth/Value Fund and the Aggressive
Growth Fund (the "New Sub-Advisory Agreements").
Touchstone Advisors, Inc. will receive from the Utility Fund and the Equity
Fund a fee at an annual rate of 0.75% of the average daily net assets of the
Fund up to $200 million; 0.70% of such assets from $200 million to $500 million;
and 0.50% of such assets in excess of $500 million. Touchstone Advisors, Inc.
will receive from the Growth/Value Fund and the Aggressive Growth Fund a fee at
an annual rate of 1.00% of the average daily net assets of the Fund up to $50
million; 0.90% of such assets from $50 million to $100 million; 0.80% of such
assets from $100 million to $200 million; and 0.75% of such assets in excess of
$200 million. These are the
4
<PAGE>
same fees that Countrywide Investments currently receives from each Fund under
the Present Advisory Agreements.
The New Advisory Agreement differs materially from the Present Advisory
Agreements in the following ways:
o The New Advisory Agreement authorizes Touchstone Advisors to employ,
at its expense, one or more sub-advisors for any Fund. Each
sub-advisor will make all determinations with respect to the
investment of assets and will place orders for the execution of
portfolio transactions. Although the Present Advisory Agreements for
the Growth/Value Fund and the Aggressive Growth Fund contain similar
provisions, the Present Advisory Agreements for the Utility Fund and
the Equity Fund do not contain similar provisions.
o The New Advisory Agreement provides that Touchstone Advisors will pay
the salaries and fees of all Trustees, officers and employees of the
Trust who are affiliates of Touchstone Advisors, while the Present
Advisory Agreements provide that Countrywide Investments will pay the
salaries and fees of any persons rendering services to the Funds who
are officers, directors, stockholders or employees of Countrywide
Investments. The Present Advisory Agreements also provide that
Countrywide Investments will pay all advertising and promotion
expenses related to the sale and distribution of the Funds' shares
which are not assumed by the Funds under their plans of distribution.
o The New Advisory Agreement contains a clause that relieves Touchstone
Advisors from liability for delays or errors beyond its control, such
as acts of God, war or failure of communication or power supply. The
Present Advisory Agreements do not contain a similar provision.
o The initial term of the New Advisory Agreement is one year from the
date of its execution and from year to year thereafter, provided its
continuance is properly approved. The initial term of the Present
Advisory Agreements is two years from the date of their execution and
from year to year thereafter, provided their continuance is properly
approved.
o The New Advisory Agreement may be amended at any time, subject to
approval by the Board of Trustees or shareholders, if required. The
Present Advisory Agreements may not be amended unless approved by
shareholders and the Board of Trustees.
o The Present Advisory Agreements direct Countrywide Investments (or
Mastrapasqua & Associates) to seek best qualitative execution when
selecting brokers and dealers to execute purchase and sale
transactions on behalf of the Funds and authorizes Countrywide
Investments (or Mastrapasqua) to pay brokers who also provide research
services a higher commission than another broker would charge if
Countrywide Investments determines that the amount of commission is
reasonable in relation to the value of the brokerage and research
services provided. The Present
5
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Advisory Agreements also authorize Countrywide Investments (or
Mastrapasqua) to give consideration to sales of shares of the Funds as
a factor in the selection of brokers and dealers. The New Advisory
Agreement does not contain similar provisions; however substantially
similar provisions are contained in the New Sub-Advisory Agreements,
except the New Sub-Advisory Agreements do not specifically give
Touchstone Advisors the authority to give consideration to sales of
shares of the Funds as a factor in the selection of brokers and
dealers.
If the New Advisory Agreement is approved by shareholders of a Fund and a
New Sub-Advisory Agreement is approved by shareholders of that Fund, the New
Advisory Agreement will become effective on May 1, 2000. The New Advisory
Agreement will continue in effect for an initial period of one year and from
year to year thereafter, provided that its continuance is specifically approved
(1) by the Board of Trustees or (2) by a vote of a majority (as defined in the
Investment Company Act) of the outstanding shares of a Fund. In either event the
continuance of the New Advisory Agreement must also be approved by a majority of
the Independent Trustees, by a vote cast in person at a meeting called for the
purpose of voting on the continuance.
The New Advisory Agreement may be terminated at any time upon 60 days'
written notice, without payment of any penalty (1) by the Board of Trustees, (2)
by a vote of the majority of the outstanding voting securities of the affected
Fund or (3) by Touchstone Advisors. The New Advisory Agreement will
automatically terminate in the event of its assignment.
The New Advisory Agreement provides that Touchstone Advisors will not be
liable for any act or omission suffered by a Fund, absent willful misfeasance,
bad faith, gross negligence, or reckless disregard of the obligations or duties
of Touchstone Advisors.
The form of the New Advisory Agreement for the Funds is attached as Exhibit
A. You should read the agreement. The description in this Proxy Statement of the
New Advisory Agreement is only a summary.
If the New Advisory Agreement is not approved by shareholders of a Fund,
Countrywide Investments will continue to serve as the investment adviser of that
Fund pursuant to the terms of the applicable Present Advisory Agreement. If the
New Advisory Agreement is approved by shareholders of a Fund but the New
Sub-Advisory Agreement is not approved by shareholders of that Fund, Countrywide
Investments will continue to serve as the investment adviser of that Fund
pursuant to the terms of the applicable Present Advisory Agreement.
INFORMATION CONCERNING TOUCHSTONE ADVISORS
- ------------------------------------------
Touchstone Advisors, located at 311 Pike Street, Cincinnati, Ohio 45202, is
a wholly-owned subsidiary of IFS Financial Services, Inc. IFS Financial
Services, also located at 311 Pike Street, Cincinnati, Ohio 45202, is a
wholly-owned subsidiary of Western-Southern Life Assurance Company, which is a
wholly-owned subsidiary of The Western and Southern Life Insurance Company.
Western-Southern Life Assurance Company and The Western and Southern Life
Insurance Company are both located at 400 Broadway, Cincinnati, Ohio 45202.
6
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The table below gives the name, address and principal occupation of each
current director and principal executive officer of Touchstone Advisors. Jill T.
McGruder is also a Trustee of the Trust.
NAME AND ADDRESS POSITION WITH PRINCIPAL OCCUPATION
TOUCHSTONE
- --------------------------------------------------------------------------------
Jill Tripp McGruder President, Chief President, Chief Executive
311 Pike Street Executive Officer and Officer and Director of IFS
Cincinnati, OH 45202 Director Financial Services, Inc. and
Touchstone Securities, Inc.
Director of Countrywide
Investments
Senior Vice President of The
Western and Southern Life
Insurance Company
Teresa Ann Siegel Vice President and Chief Financial Officer of
311 Pike Street Chief Financial IFS Financial Services, Inc.
Cincinnati, OH 45202 Officer
Patricia Jean Wilson Chief Compliance Chief Compliance Officer of
311 Pike Street Officer Touchstone Securities, Inc.
Cincinnati, OH 45202 Director of Compliance of IFS
Financial Services, Inc.
Donald Joseph Wuebbling Director Director of Touchstone
400 Broadway Securities, Inc.
Cincinnati, OH 45202 Vice President and General
Counsel of The Western and
Southern Life Insurance
Company
James Norman Clark Director Director of Touchstone
311 Pike Street Securities, Inc.
Cincinnati, OH 45202 Executive Vice President and
Director of The Western and
Southern Life Insurance
Company
William Francis Ledwin Director President and Director of
420 East Fourth Street Fort Washington Investment
Cincinnati, OH 45202 Advisors
Director of Countrywide
Investments
Vice President and Chief
Investment Officer of
Columbus Life Insurance
Company
Senior Vice President and
Chief Investment Officer of
The Western and Southern Life
Insurance Company
Touchstone Advisors serves as investment adviser to the Touchstone funds
listed in Exhibit C, each of which is a series of a registered investment
company. Exhibit C also includes information about the net assets, advisory fee
and sub-advisory fee of each Touchstone fund.
7
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PROPOSAL 2
NEW SUB-ADVISORY AGREEMENTS
THE NEW SUB-ADVISORY AGREEMENTS
- -------------------------------
The New Advisory Agreement provides that Touchstone Advisors may employ one
or more sub-advisors for any Fund. If the New Advisory Agreement is approved by
shareholders, Touchstone Advisors will appoint Fort Washington Investment
Advisors to serve as the sub-advisor for the Utility Fund and the Equity Fund
and Mastrapasqua & Associates to serve as the sub-advisor for the Growth/Value
Fund and the Aggressive Growth Fund. Fort Washington Investment Advisors and
Mastrapasqua & Associates are referred to individually as a "Sub-Advisor,"
collectively as the "Sub-Advisors."
(UTILITY FUND AND EQUITY FUND) - NEW SUB-ADVISORY AGREEMENTS WITH FORT
- --------------------------------------------------------------------------------
WASHINGTON INVESTMENT ADVISORS, INC.
- ------------------------------------
THE NEW SUB-ADVISORY AGREEMENTS. Under the terms of each New Sub-Advisory
Agreement, Fort Washington Investment Advisors manages the investment and
reinvestment of the assets of the Funds and places orders for the execution of
all portfolio transactions of the Funds, subject to the control and direction of
the Board of Trustees and Touchstone Advisors. Fort Washington Investment
Advisors receives a fee equal to 0.45% of each Fund's average daily net assets.
Touchstone Advisors, not the Funds, will pay for the services provided by
Fort Washington Investment Advisors. Fort Washington Investment Advisors will
pay its expenses of providing services to the Funds except for those expenses
which are undertaken by Touchstone Advisors or the Trust.
INFORMATION CONCERNING FORT WASHINGTON INVESTMENT ADVISORS
- ----------------------------------------------------------
Fort Washington Investment Advisors, located at 420 East Fourth Street,
Cincinnati, Ohio 45202, is a wholly-owned subsidiary of The Western and Southern
Life Insurance Company, located at 400 Broadway, Cincinnati, Ohio 45202.
The table below gives the name, address and principal occupation of each
current director and principal executive officer of Fort Washington Investment
Advisors.
NAME AND ADDRESS POSITION WITH PRINCIPAL OCCUPATION
FORT WASHINGTON
- --------------------------------------------------------------------------------
William J. Williams Chairman and Director Chairman of the Board of The
400 Broadway Western and Southern Life
Cincinnati, OH 45202 Insurance Company
William Francis Ledwin President and Director President and Director of
420 East Fourth Street Touchstone Advisors
Cincinnati, OH 45202 Director of Countrywide
Investments
Vice President and Chief
Investment Officer of
Columbus Life Insurance
Company
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Senior Vice President and
Chief Investment Officer of
The Western and Southern Life
Insurance Company
James J. Vance Vice President and Vice President and Treasurer
400 Broadway Treasurer of The Western and Southern
Cincinnati, OH 45202 Life Insurance Company
Fort Washington Investment Advisors serves as sub-adviser to certain
Touchstone funds as indicated in Exhibit C, each of which is a series of a
registered investment company. Exhibit C includes information about the net
assets, advisory fee and sub-advisory fee of each Touchstone fund for which Fort
Washington Investment Advisors serves as the sub-advisor.
(GROWTH/VALUE FUND AND AGGRESSIVE GROWTH FUND) - NEW SUB-ADVISORY AGREEMENTS
- --------------------------------------------------------------------------------
WITH MASTRAPASQUA & ASSOCIATES, INC.
- ------------------------------------
THE PRESENT SUB-ADVISORY AGREEMENTS. Mastrapasqua & Associates currently
provides investment advisory services to each of the Growth/Value Fund and the
Aggressive Growth Fund pursuant to a sub-advisory agreement among Mastrapasqua &
Associates, the Trust and Countrywide Investments (the "Present Sub-Advisory
Agreements"). The Present Sub-Advisory Agreements for the Growth/Value Fund and
the Aggressive Growth Fund are substantially identical to each other in all
material respects. The Present Sub-Advisory Agreements require Mastrapasqua &
Associates to select portfolio securities for investment by the Funds, purchase
and sell securities for the Funds and to place orders for the execution of such
portfolio transactions, subject to the general supervision of the Board of
Trustees and Countrywide Investments. The Present Sub-Advisory Agreements were
last approved by the Board of Trustees, including a majority of the Independent
Trustees on September 8, 1999. The Present Sub-Advisory Agreements were last
approved by shareholders of the Funds on October 27, 1999 and became effective
on October 29, 1999. The Present Sub-Advisory Agreements were submitted to
shareholders of the Growth/Value Fund and the Aggressive Growth Fund in 1999 in
connection with the acquisition of Countrywide Investments by Fort Washington
Investment Advisors.
During the fiscal year ended March 31, 1999, Countrywide Investments paid fees
of $154,940 and $77,608, respectively to Mastrapasqua & Associates for serving
as sub-advisor to the Growth/Value Fund and the Aggressive Growth Fund.
THE NEW SUB-ADVISORY AGREEMENTS. Effective on May 1, 2000 and subject to
shareholder approval of a new investment advisory agreement with Touchstone
Advisors, Countrywide Investments will no longer provide investment advisory
services to the Trust and the Present Sub-Advisory Agreements will be
terminated. On the same date, Mastrapasqua & Associates and Touchstone Advisors
will enter into new Sub-Advisory Agreements, on behalf of the Growth/Value Fund
and the Aggressive Growth Fund (the "New Sub-Advisory Agreements"). Mastrapasqua
& Associates will receive from Touchstone Advisors a fee at an annual rate of
0.60% of each Fund's average daily net assets up to $50 million; 0.50% of such
assets from $50 million to $100 million; 0.40% of such assets from $100 million
to $200 million; and 0.35% of
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such assets in excess of $200 million. These are the same fees that Mastrapasqua
& Associates currently receives under the Present Sub-Advisory Agreements.
Touchstone Advisors, not the Funds, will pay for the services provided by
Mastrapasqua & Associates. Mastrapasqua & Associates will pay its expenses of
providing services to the Funds except for those expenses which are undertaken
by Touchstone Advisors or the Trust.
The New Sub-Advisory Agreements differ from the Present Sub-Advisory
Agreements in the following ways:
o The Trust is a named party to the Present Sub-Advisory Agreements but is
not a named party to the New Sub-Advisory Agreements.
o The New Sub-Advisory Agreements contain a clause which relieves the
Sub-Advisor from liability for delays or errors beyond its control, such as
acts of God, war of failure of communication or power supply. The Present
Sub-Advisory Agreements do not contain a similar provision.
o The initial term of the New Sub-Advisory Agreements is one year from the
date of their execution and from year to year thereafter, provided their
continuance is properly approved. The initial term of the Present
Sub-Advisory Agreements is two years from the date of their execution and
from year to year thereafter, provided their continuance is properly
approved.
o The New Sub-Advisory Agreements may be amended at any time, subject to
approval by the Board of Trustees or shareholders, if required. The Present
Sub-Advisory Agreements may not be amended unless approved by shareholders
and the Board of Trustees.
o The Present Sub-Advisory Agreements require the Sub-Advisor to obtain
authorization from Countrywide Investments in the event it aggregates
securities purchased or sold between a Fund and other clients in order to
obtain the most favorable price or efficient execution, while the New
Sub-Advisory Agreements do not require such authorization, but require the
Sub-Advisor to submit to the Trust a statement defining its policies for
the allocation of business among a Fund and its other clients.
o The New Sub-Advisory Agreements require the Sub-Advisor to provide
marketing support to Touchstone Advisors. The Present Sub-Advisory
Agreements do not contain a similar provision.
o The New Sub-Advisory Agreements specifically state that the Sub-Advisor
will bear its expenses of providing services to the Fund except for
expenses which are undertaken by Touchstone Advisors or the Trust. The
Present Sub-Advisory Agreements do not contain a similar provision.
o The Present Sub-Advisory Agreements contain a confidentiality clause
requiring the parties to treat all information pertaining to the Fund as
confidential. The New Sub-Advisory Agreements do not contain a similar
provision.
o The Present Sub-Advisory Agreements specifically give the Sub-Advisor
authority to give consideration to sales of shares of the Funds as a factor
in the section of brokers and dealers. The New Sub-Advisory Agreements do
not contain a similar provision.
o The Present Sub-Advisory Agreements require the Sub-Advisor to adopt a Code
of Ethics and to report all violations under the Code annually to the Board
of Trustees. The New Sub-Advisory Agreements do not contain a similar
provision.
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o The Present Sub-Advisory Agreements require the Sub-Advisor to assist the
custodian in collecting income due to the Fund. The New Sub-Advisory
Agreements do not contain a similar provision.
INFORMATION CONCERNING MASTRAPASQUA & ASSOCIATES, INC. Mastrapasqua & Associates
is located at 814 Church Street, Suite 600, Nashville, Tennessee 37203.
Mastrapasqua & Associates is an independent registered investment advisory firm
founded by Frank Mastrapasqua, Ph.D. and Thomas A. Trantum, CFA. Mastrapasqua &
Associates was founded in 1993 and provides investment advisory services to high
net worth individual clients and institutions.
The table below gives the name, address and principal occupation of each current
director and principal executive officer of Mastrapasqua & Associates.
NAME AND ADDRESS POSITION WITH PRINCIPAL OCCUPATION
MASTRAPASQUA
- --------------------------------------------------------------------------------
Frank Mastrapasqua Chairman, Chief Same
814 Church Street Executive
Nashville, TN 37203 Officer and
Portfolio Manager
Thomas A. Trantum President, Chief Same
814 Church Street Operating
Nashville, TN 37203 Officer and
Portfolio Manager
ADDITIONAL INFORMATION ABOUT THE NEW SUB-ADVISORY AGREEMENTS
- ------------------------------------------------------------
If the New Advisory Agreement is approved by shareholders of a Fund and a
New Sub-Advisory Agreement is approved by shareholders of that Fund, the New
Sub-Advisory Agreement for that Fund will become effective on May 1, 2000. Each
New Sub-Advisory Agreement provides that it will continue in effect for one year
and from year to year thereafter, provided that its continuance is specifically
approved (1) by the Board of Trustees or (2) a vote of a majority (as defined in
the Investment Company Act) of the outstanding shares of a Fund. In either
event, continuance of the New Sub-Advisory Agreement must also approved by a
majority of the Independent Trustees, by a vote cast in person at a meeting
called for the purpose of voting on the continuance.
Each New Sub-Advisory Agreement may be terminated at any time upon 60 days'
written notice, without payment of any penalty (1) by Touchstone Advisors, (2)
by the Board of Trustees or by a vote of the majority of the outstanding voting
securities of the affected Fund or (3) by the Sub-Advisor. Each New Sub-Advisory
Agreement automatically terminates in the event of its assignment.
The New Sub-Advisory Agreements provide that the Sub-Advisor will not be
liable to Touchstone Advisors or the Trust for any act or omission in connection
with the services that the Sub-Advisor provides to a Fund, absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
obligations or duties of the Sub-Advisor.
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The form of the New Sub-Advisory Agreement for the Funds is attached as
Exhibit B. You should read the agreement. The description in this Proxy
Statement of the New Sub-Advisory Agreements is only a summary.
If a New Sub-Advisory Agreement is not approved by shareholders of the
Utility Fund or the Equity Fund, Countrywide Investments will continue to serve
as the investment adviser of the Fund pursuant to the terms of the applicable
Present Advisory Agreement and the Fund will not have a sub-advisor. If a New
Sub-Advisory Agreement is not approved by shareholders of the Growth/Value Fund
or the Aggressive Growth Fund, Mastrapasqua & Associates will continue to serve
as the sub-advisor of the Fund pursuant to the terms of the Present Sub-Advisory
Agreement. If a New Sub-Advisory Agreement is approved by shareholders of a Fund
but the New Advisory Agreement is not approved by the shareholders of that Fund,
Countrywide Investments will continue to serve as the investment advisor of that
Fund pursuant to the terms of the applicable Present Advisory Agreement.
PROPOSALS 1 AND 2
EVALUATION BY THE BOARD OF TRUSTEES
On February 15, 2000, the Board of Trustees, including all of the
Independent Trustees, by a vote cast in person, unanimously approved the New
Advisory Agreement and the New Sub-Advisory Agreements, subject to the required
shareholder approval described in this Proxy Statement.
In determining to recommend approval of the New Advisory Agreement and the
New Sub-Advisory Agreements to shareholders of the Trust, the Independent
Trustees separately and the entire Board of Trustees considered the following
information:
o information about the operations of Touchstone Advisors and Fort
Washington Investment Advisors, including information regarding the
performance of the Touchstone funds managed by Touchstone Advisors and
Fort Washington Investment Advisors
o information about the operations of Mastrapasqua & Associates,
including information regarding the performance of the Countrywide
funds managed by Mastrapasqua & Associates
o information about the background and experience of the investment
advisory personnel of the Sub-Advisors and the nature and quality of
services expected to be rendered to the Trust by Touchstone Advisors
and the Sub-Advisors
The Board of Trustees further considered that the fees to be paid by the
Funds under the New Advisory Agreement will be the same as those under the
Present Advisory Agreements, and that the terms of the New Advisory Agreement
are similar to the terms of the Present Advisory Agreements.
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In making its determination, the Board considered management's
representations that the employees of Countrywide Investments who are currently
responsible for the daily management of the Utility Fund and the Equity Fund
will continue to manage the Funds in their capacity as employees of Fort
Washington Investment Advisors, thereby providing continuity of management to
shareholders of the Funds. The Trustees further considered that the retention of
Mastrapasqua & Associates as Sub-Advisor for the Growth/Value Fund and the
Aggressive Growth Fund will afford shareholders of those Funds continuity of
investment management.
The Board also considered that the Utility Fund and the Equity Fund may
benefit from an additional layer of professional management expertise through
the employment of both an investment advisor and a sub-adviser, at no extra cost
to the Funds. The Trustees determined that the retention of Touchstone Advisors
and the Sub-Advisors to provide advisory and sub-advisory services to the Funds
will not materially affect the level or quality of investment advisory services
currently provided to the Funds.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS APPROVE THE NEW ADVISORY
AGREEMENT AND THE NEW SUB-ADVISORY AGREEMENTS.
PROPOSAL 3
CHANGE IN INDEPENDENT ACCOUNTANTS
On February 15, 2000, the Board of Trustees, including a majority of the
Independent Trustees, voted to recommend a change in the Trust's independent
public accountants for the fiscal year ending March 31, 2000. Due to the timing
of this recommended change, specific provisions of the Investment Company Act of
1940 will apply. These provisions require that the shareholders first terminate
the employment of Arthur Andersen LLP as the Trust's independent public
accountants and then select Ernst & Young LLP to serve as independent public
accountants.
The change in independent accountants was recommended by Trust's Audit
Committee. In reaching its decision, the Audit Committee considered (1) the
reputation and experience of Ernst & Young, (2) the fees proposed to be charged
by Ernst & Young, (3) the scope and quality of services expected to be provided
to the Trust by Ernst & Young and (4) the ongoing relationship between Ernst &
Young and The Western-Southern Enterprise. The employment of Ernst & Young will
be conditioned upon the right of the Trust, by a vote of a majority of its
outstanding shares, to terminate the employment without any penalties.
Arthur Andersen has acted as the Trust's independent public accountants
from 1983 until its most recently completed fiscal year. During the Trust's two
most recent fiscal years or any subsequent period before Arthur Andersen's
termination, there were no disagreements on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure
which would have caused Arthur Andersen to make a reference to the subject
matter or the disagreements in connection with its report.
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If this proposal is not approved by the shareholders, the employment of
Arthur Andersen as the Trust's independent public accountant for the fiscal year
ending March 31, 2000 will continue subject to the right of the shareholders to
terminate their employment.
Representatives of Ernst & Young and Arthur Andersen are not expected to be
present at the meeting although they will have an opportunity to make a
statement, if they desire to do so. If representatives of Ernst & Young or
Arthur Andersen are present, they will be available to respond to appropriate
questions from shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS APPROVE THE CHANGE IN
THE TRUST'S INDEPENDENT PUBLIC ACCOUNTANTS.
THE PROXY
The Board of Trustees solicits proxies so that each shareholder has the
opportunity to vote on each proposal to be considered at the meeting. A proxy
for voting your shares at the meeting is enclosed. Your proxy, if properly
executed, duly returned and not revoked or if properly voted by phone, will be
voted according to the instructions on the proxy.
A properly executed proxy that has no voting instructions with respect to a
proposal will be voted for that proposal. In addition, proxies will be voted in
the discretion of the proxy holders, in accordance with the recommendations of
the Board of Trustees, if any, on any matter to come before the meeting that the
Trust did not have notice of a reasonable time before the mailing of this Proxy
Statement.
You may revoke your proxy at any time before it is exercised by (1) filing
a written notification of revocation with the Secretary of the Trust, (2)
submitting a proxy bearing a later date, or (3) attending and voting at the
meeting.
For your convenience, you can vote your proxy (1) by dating, signing and
mailing back the enclosed proxy, or (2) by calling and voting by telephone. Your
proxy contains specific instructions on how to vote by telephone.
COST OF SOLICITATION
The Trust has retained Management Information Services Corp. ("MIS") to
solicit proxies for the special meeting. MIS is responsible for printing proxy
cards, mailing proxy material to shareholders, soliciting brokers, custodians,
nominees and fiduciaries, tabulating the returned proxies and performing other
proxy solicitation services.
The anticipated cost of these services is approximately $______, and will
be paid by Touchstone Advisors. Touchstone Advisors will also pay the printing
and postage costs of the solicitation. Touchstone Advisors will reimburse MIS,
brokers, custodians, nominees and fiduciaries for the reasonable expenses
incurred by them in connection with forwarding solicitation material to the
beneficial owners of shares held of record by these persons.
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In addition to solicitation through the mails, proxies may be solicited by
officers, employees and agents of the Trust without cost to the Fund. This
solicitation may be by telephone, facsimile or otherwise.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
RECORD DATE
- -----------
The Board of Trustees has fixed the close of business on February 28, 2000
as the record date for determining the shareholders entitled to notice of and to
vote at the special meeting of shareholders or any adjournment thereof. The
Trust is composed of 4 separate funds, the Utility Fund, the Equity Fund, the
Growth/Value Fund and the Aggressive Growth Fund (individually a "Fund" and
collectively, the "Funds"), each of which is represented by a separate series of
the Trust's shares.
As of the record date there were _________shares of beneficial interest, no
par value, of the Trust outstanding, comprised of shares of each Fund as
follows:
Name of Fund Number of Shares Outstanding
-------------------------------------------------------------------------
Utility Fund
Equity Fund
Growth/Value Fund
Aggressive Growth Fund
All full shares of the Trust are entitled to one vote, with proportionate
voting for fractional shares.
QUORUM AND VOTING
- -----------------
PROPOSALS 1 AND 2. Each Fund will vote separately on Proposal 1 and on
Proposal 2. If a quorum (more than 50% of the outstanding shares of a Fund) is
represented at the meeting, the vote of a majority of the outstanding shares of
the Fund is required for approval of the New Advisory Agreement with Touchstone
Advisors and the New Sub-Advisory Agreement with the applicable Sub-Advisor. The
vote of a majority of the outstanding shares means the vote of the lesser of (1)
67% or more of the shares present or represented by proxy at the meeting, if the
holders of more than 50% of the outstanding shares are present or represented by
proxy, or (2) more than 50% of the outstanding shares.
PROPOSAL 3. The Funds will vote together on Proposal 3. The vote of a
simple majority of the shares voted is required for the termination of the
Trust's current independent public accountant and the selection of Ernst & Young
as the Trust's independent public accountants.
If the meeting is called to order but a quorum is not represented at the
meeting, the persons named as proxies may vote the proxies that have been
received to adjourn the meeting to
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<PAGE>
a later date. If a quorum is present at the meeting but sufficient votes to
approve the proposals described in this Proxy Statement are not received, the
persons named as proxies may propose one or more adjournments of the meeting to
permit additional solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the meeting in
person or by proxy. The proxy holders will vote those proxies received that
voted in favor of the proposal in favor of such an adjournment and will vote
those proxies received that voted against the proposal against any such
adjournment. A shareholder vote may be taken on one or more of the proposals in
this Proxy Statement before any such adjournment if sufficient votes have been
received and it is otherwise appropriate.
Abstentions and "broker non-votes" are counted for purposes of determining
whether a quorum is present but do not represent votes cast with respect to a
proposal. "Broker non-votes" are shares held by a broker or nominee for which an
executed proxy is received by the Trust, but are not voted as to one or more
proposals because instructions have not been received from the beneficial owners
or persons entitled to vote and the broker or nominee does not have
discretionary voting power. Accordingly, "broker non-votes" and abstentions on
Proposal 1 or Proposal 2 effectively will be a vote against the applicable
proposal.
The Trustees of the Trust intend to vote all of their shares in favor of
the proposals described in this Proxy Statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- -----------------------------------------------
On February 28, 2000 the following persons owned 5% or more of the
outstanding shares of the Trust or a Fund.
NAME AND ADDRESS OF AMOUNT OWNED OF PERCENTAGE OF
NAME OF FUND RECORD OWNER RECORD OUTSTANDING SHARES
- --------------------------------------------------------------------------------
Utility Fund
Equity Fund
Growth/Value Fund
Aggressive Growth
Fund
[OWNERSHIP OF TRUSTEES AND OFFICERS]
No other person owned of record and, according to information available to
the Trust, no other person owned beneficially, 5% of more of the outstanding
shares of the Trust (or any Fund) on the record date.
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INFORMATION CONCERNING THE TRUST'S OTHER SERVICE PROVIDERS
TRANSFER, ACCOUNTING AND ADMINISTRATIVE AGENT
- ---------------------------------------------
Countrywide Fund Services, Inc. provides transfer agency, shareholder
servicing and accounting and pricing services to the Funds. The address of
Countrywide Fund Services is 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202. Countrywide Fund Services is an affiliate of Countrywide Investments,
Touchstone Advisors and Fort Washington Investment Advisors.
During the fiscal year ended March 31, 1999, it received fees from the
Funds for its services as transfer and shareholder servicing agent and
accounting and pricing services agent as follows:
As Transfer and As Accounting and
Shareholder Servicing Pricing Services
Agent Agent
- --------------------------------------------------------------------------------
Utility Fund $45,695 $36,000
Equity Fund $36,679 $39,000
Growth/Value Fund $12,491 $24,000
Aggressive Growth Fund $12,250 $24,000
Countrywide Fund Services also provides administrative services to the
Funds. In this capacity, Countrywide Fund Services supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and reports
to and filings with the Securities and Exchange Commission and state securities
authorities. Countrywide Investments (not the Funds) pays Countrywide Fund
Services a fee of $37,500 per month for these services, which is allocated among
the Trust, Countrywide Investment Trust and Countrywide Tax-Free Trust based
upon the level of assets.
Countrywide Fund Services will continue to provide transfer agent,
shareholder servicing, accounting and pricing and administrative services to the
Trust at the same rates as are currently in effect after the consolidation of
the Touchstone and Countrywide mutual fund complexes. If the New Advisory
Agreement and New Sub-Advisory Agreements are approved, Touchstone Advisors (not
the Funds) will pay Countrywide Fund Services for these services.
PRINCIPAL UNDERWRITER
- ---------------------
Countrywide Investments, 312 Walnut Street 21st Floor, Cincinnati, Ohio
45202, currently serves as the Trust's principal underwriter. During the fiscal
year ended March 31, 1999, the Trust paid Countrywide Investments $8,323 in
underwriting commissions.
After the consolidation of the Touchstone and Countrywide mutual fund
complexes, Touchstone Securities, Inc., 311 Pike Street, Cincinnati, Ohio 45202,
will serve as the Trust's principal underwriter. Touchstone Securities is an
indirect wholly-owned subsidiary of The Western and Southern Life Insurance
Company.
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SHAREHOLDER PROPOSALS
The Trust has not received any shareholder proposals to be considered for
presentation at the meeting. Under the proxy rules of the Securities and
Exchange Commission, shareholder proposals may under certain conditions be
included in the Trust's proxy statement and proxy for a particular meeting.
Under these rules, proposals submitted for inclusion in the Trust's proxy
material must be received by the Trust a reasonable time before the solicitation
is made. The fact that the Trust receives a shareholder proposal in a timely
manner does not insure its inclusion in its proxy material because there are
other requirements in the proxy rules relating to such inclusion. You should be
aware that the Trust generally does not hold annual meetings of shareholders.
OTHER BUSINESS
The proxy holders have no present intention of bringing any matter before
the meeting other than those specifically referred to in the Proxy Statement or
matters in connection with or for the purpose of effecting the same. Neither the
proxy holders nor the Board of Trustees are aware of any matters that may be
presented by others. If any other business properly comes before the meeting,
the proxy holders intend to vote on the other business in accordance with their
best judgment.
By Order of the Board of Trustees,
Tina D. Hosking, Secretary
Date: ______, 2000
Please complete, date and sign the enclosed proxy and return it promptly in the
enclosed reply envelope or vote by phone by following the instructions on the
enclosed proxy.
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EXHIBIT A
FORM OF INVESTMENT ADVISORY AGREEMENT
COUNTRYWIDE STRATEGIC TRUST
INVESTMENT ADVISORY AGREEMENT, dated as of ______________, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and COUNTRYWIDE
STRATEGIC TRUST, a Massachusetts business trust created pursuant to a
Declaration of Trust dated November 18, 1982, 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.
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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.
b) The Advisor shall, or shall cause the respective Sub-Advisor(s) to
place orders for the execution of all portfolio transactions, in the
name of the respective Fund and in accordance with the policies with
respect thereto set forth in the Trust's registration statements under
the 1940 Act and the Securities Act of 1933, as such registration
statements may be amended from time to time. In connection with the
placement of orders for the execution of portfolio transactions, the
Advisor shall create and maintain (or cause the Sub-Advisors to create
and maintain) all necessary brokerage records for each Fund, which
records shall comply with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the
1940 Act. All records shall be the property of the Trust and shall be
available for inspection and use by the Securities and Exchange
Commission (the "SEC"), the Trust or any person retained by the Trust.
Where applicable, such records shall be maintained by the Advisor (or
Sub-Advisor) for the periods and in the places required by Rule 31a-2
under the 1940 Act.
c) In the event of any reorganization or other change in the Advisor, its
investment principals, supervisors or members of its investment (or
comparable) committee, the Advisor shall give the Trust's Board of
Trustees written notice of such reorganization or change within a
reasonable time (but not later than 30 days) after such reorganization
or change.
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d) The Advisor shall bear its expenses of providing services to the Trust
pursuant to this Agreement except such expenses as are undertaken by
the Trust. In addition, the Advisor shall pay the salaries and fees,
if any, of all Trustees, officers and employees of the Trust who are
affiliated persons, as defined in Section 2(a)(3) of the 1940 Act, of
the Advisor.
e) The Advisor will manage, or will cause the Sub-Advisors to manage, the
Fund assets and the investment and reinvestment of such assets so as
to comply with the provisions of the 1940 Act and with Subchapter M of
the Internal Revenue Code of 1986, as amended.
3. EXPENSES.
The Trust shall pay the expenses of its operation, including but not
limited to (i) charges and expenses for Trust accounting, pricing and appraisal
services and related overhead, (ii) the charges and expenses of the Trust's
auditors; (iii) the charges and expenses of any custodian, transfer agent, plan
agent, dividend disbursing agent and registrar appointed by the Trust with
respect to the Funds; (iv) brokers' commissions, and issue and transfer taxes,
chargeable to the Trust in connection with securities transactions to which the
Trust is a party; (v) insurance premiums, interest charges, dues and fees for
Trust membership in trade associations and all taxes and fees payable by the
Trust to federal, state or other governmental agencies; (vi) fees and expenses
involved in registering and maintaining registrations of the Trust and/or shares
of the Trust with the SEC, state or blue sky securities agencies and foreign
countries, including the preparation of Prospectuses and Statements of
Additional Information for filing with the SEC; (vii) all expenses of meetings
of Trustees and of shareholders of the Trust and of preparing, printing and
distributing prospectuses, notices, proxy statements and all reports to
shareholders and to governmental agencies; (viii) charges and expenses of legal
counsel to the Trust; (ix) compensation of Trustees of the Trust; and (x)
interest on borrowed money, if any.
4. COMPENSATION OF THE ADVISOR.
a) As compensation for the services rendered and obligations assumed
hereunder by the Advisor, the Trust shall pay to the Advisor monthly a
fee that is equal on an annual basis to that percentage of the average
daily net assets of each Fund set forth on Schedule 1 attached hereto
(and with respect to any future Fund, such percentage as the Trust and
the Advisor may agree to from time to time). Such fee shall be
computed and accrued daily. If the Advisor serves as investment
advisor for less than the whole of any period specified in this
Section 4a, the compensation to the Advisor shall be prorated. For
purposes of calculating the 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.
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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 "__________ Strategic 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.
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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.
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10. RENEWAL, TERMINATION AND AMENDMENT.
a) This Agreement shall continue in effect, unless sooner terminated as
hereinafter provided, for a period of one year 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.
24
<PAGE>
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 November 18, 1982
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.
COUNTRYWIDE STRATEGIC TRUST
By: ____________________________
TOUCHSTONE ADVISORS, INC.
By: ____________________________
25
<PAGE>
SCHEDULE 1
EQUITY FUND
UTILITY FUND
Each Fund pays the Advisor a fee equal to the annual rate of 0.75% on the first
$200 million of average daily net assets; 0.70% of the next $300 million of
average daily net assets and 0.50% of such assets in excess of $500 million.
GROWTH/VALUE FUND
AGGRESSIVE GROWTH FUND
Each Fund pays the Advisor a fee equal to the annual rate of 1.00% on the first
$50 million of average daily net assets; 0.80% of the next $100 million of
average daily net assets and 0.75% of such assets in excess of $200 million.
26
<PAGE>
EXHIBIT B
FORM OF SUB-ADVISORY AGREEMENT
COUNTRYWIDE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of ______________, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
__________________, a ________ 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
Countrywide Strategic Trust (the "Trust"), a Massachusetts business trust
organized pursuant to a Declaration of Trust dated November 18, 1982 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 ___________ 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,
27
<PAGE>
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.
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
28
<PAGE>
stability of the broker, the efficiency with which the transaction will be
effected, the ability to effect the transaction at all where a large block
is involved and the availability of the broker or dealer to stand ready to
execute possibly difficult transactions in the future. The Sub-Advisor is
specifically authorized, to the extent authorized by law (including,
without limitation, Section 28(e) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), to pay a broker or dealer who provides
research services to the Sub-Advisor an amount of commission for effecting
a portfolio transaction in excess of the amount of commission another
broker or dealer would have charged for effecting such transaction, in
recognition of such additional research services rendered by the broker or
dealer, but only if the Sub-Advisor determines in good faith that the
excess commission is reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer viewed in terms of
the particular transaction or the Sub-Advisor's overall responsibilities
with respect to discretionary accounts that it manages, and that the Fund
derives or will derive a reasonably significant benefit from such research
services. The Sub-Advisor will present a written report to the Board of
Trustees of the Trust, at least quarterly, 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.
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 ____% 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.
29
<PAGE>
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
30
<PAGE>
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, until __________, 2001; 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.
31
<PAGE>
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 ________________________.
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: __________________________________
Name: Jill T. McGruder
Title: President
______________________________________
By: __________________________________
Name:
Title: President
32
<PAGE>
EXHIBIT C
The advisory fees and sub-advisory fees in the following table are shown as
a percentage of average daily net assets of the applicable Touchstone Fund. Each
Touchstone Fund pays the applicable advisory fee to Touchstone Advisors.
Touchstone Advisors, not the Touchstone Fund, pays the applicable sub-advisory
fee to Fort Washington Investment Advisors.
<TABLE>
<CAPTION>
NET ASSETS ANNUAL SUB-ADVISORY FEE
TOUCHSTONE SERIES TRUST AS OF MARCH 1, 2000 ANNUAL ADVISORY FEE PAID TO FORT WASHINGTON
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Touchstone Emerging 0.80% of average Not applicable
Growth Fund daily net assets
Touchstone 0.95% of average Not applicable
International daily net assets
Equity Fund
Touchstone Income 0.65% of average Not applicable
Opportunity Fund daily net assets
Touchstone Value 0.75% of average 0.45% of average
Plus Fund daily net assets daily net assets
Touchstone Growth & 0.80% of average Not applicable
Income Fund daily net assets up
to $150 million
0.75% of average
daily net assets
over $150 million
Touchstone Balanced 0.80% of average Not applicable
Fund daily net assets
Touchstone Bond Fund 0.55% of average 0.30% of average
daily net assets daily net assets
Touchstone Standby 0.25% of average 0.15% of average
Income Fund daily net assets daily net assets
</TABLE>
During the fiscal year ending December 31, 1999, Touchstone Advisors waived all
or a portion of its advisory fees for each Fund. There is no assurance
that any fee waivers will continue in the future.
33
<PAGE>
<TABLE>
<CAPTION>
TOUCHSTONE VARIABLE NET ASSETS ANNUAL SUB-ADVISORY FEE
SERIES TRUST AS OF MARCH 1, 2000 ANNUAL ADVISORY FEE PAID TO FORT WASHINGTON
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Touchstone Emerging 0.80% of average Not applicable
Growth Fund daily net assets
Touchstone 0.95% of average Not applicable
International daily net assets
Equity Fund
Touchstone Income 0.65% of average Not applicable
Opportunity Fund daily net assets
Touchstone Value 0.75% of average 0.45% of average
Plus Fund daily net assets daily net assets
Touchstone Growth & 0.80% of average Not applicable
Income Fund daily net assets up
to $150 million
0.75% of average
daily net assets
over $150 million
Touchstone Balanced 0.80% of average Not applicable
Fund daily net assets
Touchstone Bond Fund 0.55% of average 0.30% of average
daily net assets daily net assets
Touchstone Standby 0.25% of average 0.15% of average
Income Fund daily net assets daily net assets
Touchstone Enhanced 0.65% of average
30 Fund daily net assets
Touchstone Small 0.80% of average
Cap Value Fund daily net assets
Touchstone High 0.60% of average
Yield Fund daily net assets
</TABLE>
During the fiscal year ending December 31, 1999, Touchstone Advisors waived all
or a portion of its advisory fees for each Fund. There is no assurance that any
fee waivers will continue in the future.
34
<PAGE>
TO VOTE BY TELEPHONE:
1. Read the Proxy Statement and have your Proxy Card at hand.
2. Call toll-free 1-888-221-0697
3. Enter the 14-digit Control Number found on your Proxy Card.
4. Follow the simple instructions.
Please fold and detach card at perforation before mailing
PROXY
COUNTRYWIDE STRATEGIC TRUST
SPECIAL MEETING OF SHAREHOLDERS
APRIL 19, 2000
The undersigned shareholder of Countrywide Strategic Trust (the "Trust")
hereby nominates, constitutes and appoints Robert H. Leshner and Maryellen
Peretzky, and each of them, the attorney, agent and proxy of the undersigned,
with full powers of substitution, to vote all the shares of the Trust which the
undersigned is entitled to vote at the Special Meeting of Shareholders of the
Trust to be held at the Trust's offices at 312 Walnut Street, 21st Floor,
Cincinnati, Ohio 45202, on Wednesday, April 19, 2000 at 10:00 a.m. and at any
and all adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present as set forth herein:
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY.
DATED: ___________________, 2000
Signature(s) (if held jointly)
(Please date this proxy and sign your name as it
appears at left. Executors, administrators,
trustees, etc. should give their full titles.
All joint owners should sign.)
<PAGE>
Please fold and detach card at perforation before mailing.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUST'S BOARD OF TRUSTEES, AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE TRUST A
WRITTEN INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER
DATE, OR BY APPEARING IN PERSON AND VOTING AT THE MEETING.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE OF "FOR" ON PROPOSALS 1, 2 AND 3.
THE PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES UNLESS A CONTRARY INSTRUCTION IS INDICATED, IN WHICH CASE THE PROXY
SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS. ON OTHER MATTERS, IF ANY,
PRESENTED AT THE MEETING, THIS PROXY SHALL BE VOTED IN THE DISCRETION OF THE
PROXY HOLDERS, IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF TRUSTEES,
IF ANY.
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. APPROVAL OF NEW INVESTMENT ADVISORY
AGREEMENT WITH TOUCHSTONE ADVISORS,
INC.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. (UTILITY FUND AND EQUITY FUND ONLY)
APPROVAL OF NEW SUB-ADVISORY
AGREEMENT WITH FORT WASHINGTON
INVESTMENT ADVISORS, INC.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(GROWTH/VALUE FUND AND AGGRESSIVE
GROWTH FUND ONLY) APPROVAL OF NEW
SUB-ADVISORY AGREEMENT WITH
MASTRAPASQUA & ASSOCIATES, INC.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF APPOINTMENT OF ERNST &
YOUNG LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR
ENDING MARCH 31, 2000.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
