EXHIBIT INDEX
77C. Matters Submitted to a Vote of Security Holders
77I. Terms of New or Amended Securities
77Q.1. Exhibits
Investment Advisory Agreement with Touchstone Advisors, Inc.
Sub-Advisory Agreement with Mastrapasqua & Associates, Inc. for
Growth/Value Fund
Sub-Advisory Agreement with Mastrapasqua & Associates, Inc. for
Aggressive Growth Fund
Sub-Advisory Agreement with David L. Babson & Company, Inc. for
Emerging Growth Fund
Sub-Advisory Agreement with Westfield Capital Management, Inc. for
Emerging Growth Fund
Sub-Advisory Agreement with Credit Suisse Asset Management, Inc. for
International Equity Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc.
for Value Plus Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc.
for Equity Fund
Sub-Advisory Agreement with Fort Washington Investment Advisors, Inc.
for Utility Fund
Sub-Advisory Agreement with Todd Investment Advisors, Inc. for
Enhanced 30 Fund
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77C. Matters Submitted to a Vote of Security Holders
On April 19, 2000, a Special Meeting of Shareholders was held
in order to approve certain matters in connection with the
consolidation of the Touchstone mutual fund complex and the
Countrywide mutual fund complex. The Trust's shareholders voted to
consider approval of a new investment advisory agreement with
Touchstone Advisors, Inc. Shareholders of the Utility Fund and the
Equity Fund voted to approve a new sub-advisory agreement with Fort
Washington Investment Advisors, Inc. Shareholders of the
Growth/Value Fund and the Aggressive Growth Fund voted to approve a
new sub-advisory agreement with Mastrapasqua & Associates, Inc.
Shareholders also voted to terminate the employment of the Trust's
current independent public accountants and to approve the selection
of Ernst & Young LLP as the Trust's new accountants.
The shareholders approved all proposals submitted to them for
a vote. The number of votes cast for and against each proposal was
as follows:
PROPOSAL #1. Approval of Investment Advisory Agreement with Touchstone
Advisors, Inc.
Growth/Value Fund
Number of Shares
For Against Abstain
1,410,207.073 7,738.380 10,818.282
Aggressive Growth Fund
Number of Shares
For Against Abstain
637,779.704 1,134.640 457.076
Utility Fund
Number of Shares
For Against Abstain
1,158,080.596 28,998.279 43,070.341
Equity Fund
Number of Shares
For Against Abstain
1,672,675.153 10,139.788 5,074.728
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PROPOSAL #2. Approval of Sub-Advisory Agreements with Fort Washington
Investment Advisors, Inc.
Utility Fund
Number of Shares
For Against Abstain
1,150,827.692 32,553.333 46,768.191
Equity Fund
Number of Shares
For Against Abstain
1,672,667.125 9,743.568 5,478.976
PROPOSAL #3. Approval of Sub-Advisory Agreements with Mastrapasqua &
Associates, Inc.
Growth/Value Fund
Number of Shares
For Against Abstain
1,406,005.148 9,041.225 13,717.362
Aggressive Growth Fund
Number of Shares
For Against Abstain
637,147.505 1,164.880 1,059.035
PROPOSAL #4. Approval of Selection of Ernst & Young LLP as Independent Auditors
Growth/Value Fund
Number of Shares
For Against Abstain
1,392,359.080 10,070.293 26,334.362
Aggressive Growth Fund
Number of Shares
For Against Abstain
636,820.264 1,478.246 1,072.910
Utility Fund
Number of Shares
For Against Abstain
1,120,350.420 42,032.213 67,766.583
Equity Fund
Number of Shares
For Against Abstain
1,669,562.876 6,210.207 12,116.586
77I. Terms of New or Amended Securities
On February 15, 2000, the Board of Trustees approved the establishment
of a new series of Registrant, the Enhanced 30 Fund. On the same date the Board
also approved the reorganization of three series of Touchstone Series Trust, the
International Equity Fund, the Emerging Growth Fund and the Value Plus Fund into
Registrant. The newly established series and the reorganized series each offer
Class A and Class C Shares and began operations on May 1, 2000. The reorganized
series of Registrant currently have a fiscal year end of December 31.
The Enhanced 30 Fund seeks to achieve a total return which is higher
than the total return of the Dow Jones Industrial Average. The International
Equity Fund seeks to increase the value of Fund shares over the long term by
investing primarily in equity securities of foreign companies. The Emerging
Growth Fund seeks to increase the value of Fund shares as a primary goal and to
earn income as a secondary goal by investing primarily in the common stocks of
smaller, rapidly growing companies. The Value Plus Fund seeks to increase the
value of Fund shares over the long term by investing primarily in common stocks
of larger companies that the portfolio manager believes are undervalued.
On March 16, 2000, the Board of Trustees approved the issuance of Class
C Shares of the Aggressive Growth Fund. Class C Shares are sold with a maximum
front-end sales load of 1.25% and a maximum deferred sales charge of 1.00% on
shares redeemed within one year of their purchase. The Aggressive Growth Fund
began offering Class C Shares on May 1, 2000.
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77Q.1. EXHIBITS
INVESTMENT ADVISORY AGREEMENT
TOUCHSTONE STRATEGIC TRUST
INVESTMENT ADVISORY AGREEMENT, dated as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and TOUCHSTONE
STRATEGIC TRUST, a Massachusetts business trust created pursuant to an Agreement
and 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.
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:
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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.
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.
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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.
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
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are or may become similarly interested in the Trust, and that the Advisor may
become interested in the Trust as a shareholder or otherwise.
6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; except that the Trust may use
such name in any document which merely refers in accurate terms to its
appointment hereunder or in any situation which is required by the SEC or a
state securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Advisor will not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; except that the Advisor may use such name in any document
which merely refers in accurate terms to the appointment of the Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission. In all other cases, the parties may use such names to the extent
that the use is approved by the party named, it being agreed that in no event
shall such approval be unreasonably withheld.
The Trustees of the Trust acknowledge that the Advisor has reserved
for itself the rights to the name "Touchstone 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.
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
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reasonable expenses incurred by it in connection with the matter
as to which it is seeking indemnification in the manner and to
the fullest extent that would be permissible under the applicable
provisions of the General Corporation Law of Ohio. The Advisor
shall provide to the Trust a written affirmation of its good
faith belief that the standard of conduct necessary for
indemnification under such law has been met and a written
undertaking to repay any such advance if it should ultimately be
determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions
shall be met: (i) the Advisor shall provide security in form and
amount acceptable to the Trust for its undertaking; (ii) the
Trust is insured against losses arising by reason of the advance;
or (iii) a majority of a quorum of the Trustees of the Trust, the
members of which majority are disinterested non-party Trustees,
or independent legal counsel in a written opinion, shall have
determined, based on a review of facts readily available to the
Trust at the time the advance is proposed to be made, that there
is reason to believe that the Advisor will ultimately be found to
be entitled to indemnification.
8. LIMITATION OF TRUST'S LIABILITY. The Advisor acknowledges that it has
received notice of and accepts the limitations upon the Trust's liability set
forth in its Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Advisor shall not seek satisfaction of any such obligation
from the holders of the shares of any Fund nor from any Trustee, officer,
employee or agent of the Trust.
9. FORCE MAJEURE. The Advisor shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but not
limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
10. RENEWAL, TERMINATION AND AMENDMENT.
a) This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided, for a period of two years from the date
hereof and it shall continue indefinitely thereafter as to each
Fund, provided that such continuance is specifically approved by
the parties hereto and, in addition, at least annually by (i) the
vote of holders of a majority of the outstanding voting
securities of the affected Fund or by vote of a majority of the
Trust's Board of Trustees and (ii) by the vote of a majority of
the Trustees who are not parties to this Agreement or interested
persons of the Advisor, cast in person at a meeting called for
the purpose of voting on such approval.
b) This Agreement may be terminated at any time, with respect to any
Fund(s), without payment of any penalty, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the affected Fund(s)
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upon 60 days' prior written notice to the Advisor and by the
Advisor upon 60 days' prior written notice to the Trust.
c) This Agreement may be amended at any time by the parties hereto,
subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of any Fund
affected by such change. This Agreement shall terminate
automatically in the event of its assignment.
d) The terms "assignment," "interested persons" and "majority of the
outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
11. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Agreement and 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.
TOUCHSTONE STRATEGIC TRUST
By: /s/ Jill T. McGruder
-------------------------
Title: President
-------------------------
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
-------------------------
Title: President
-------------------------
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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; 0.90% of the next $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.
INTERNATIONAL EQUITY FUND
The Fund pays the Advisor a fee equal to the annual rate of 0.95% of average
daily net assets.
EMERGING GROWTH FUND
The Fund pays the Advisor a fee equal to the annual rate of 0.80% of average
daily net assets.
ENHANCED 30 FUND
The Fund pays the Advisor a fee equal to the annual rate of 0.65% of average
daily net assets.
VALUE PLUS FUND
The Fund pays the Advisor a fee equal to the annual rate of 0.75% of average
daily net assets.
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SUBADVISORY AGREEMENT
Mastrapasqua & Associates, Inc.
814 Church Street
Nashville, TN 37203
Gentlemen:
Touchstone Strategic Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into separate series or funds. Each such share of a fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that fund. Each
fund has separate investment objectives and policies. The Growth/Value Fund (the
"Fund") has been established as a series of the Trust.
Touchstone Advisors, Inc. (the "Manager") acts as the investment manager
for the Fund pursuant to the terms of an Investment Advisory Agreement. The
Manager is responsible for the coordination of investment of the Fund's assets
in portfolio securities. However, specific portfolio purchases and sales for the
investment portfolio of the Fund are to be made by advisory organizations
recommended by the Manager and approved by the Board of Trustees of the Trust.
1. APPOINTMENT AS AN ADVISOR. The Trust being duly authorized hereby
appoints and employs Mastrapasqua & Associates, Inc. (the "Advisor") as the
discretionary portfolio manager of the Fund, on the terms and conditions set
forth herein.
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2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Advisor
accepts the appointment as the discretionary portfolio manager and agrees to use
its best professional judgment to make timely investment decisions for the Fund
in accordance with the provisions of this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF ADVISOR. The Advisor is hereby
employed and authorized to select portfolio securities for investment by the
Fund, to purchase and sell securities of the Fund, and upon making any purchase
or sale decision, to place orders for the execution of such portfolio
transactions in accordance with paragraphs 5 and 6 hereof. In providing
portfolio management services to the Fund, the Advisor shall be subject to such
investment restrictions as are set forth in the Act and the rules thereunder,
the Internal Revenue Code, applicable state securities laws, the supervision and
control of the Board of Trustees of the Trust, such specific instructions as the
Board of Trustees may adopt and communicate to the Advisor, the investment
objectives, policies and restrictions of the Fund furnished pursuant to
paragraph 4, the provisions of Schedule A hereto and instructions from the
Manager. The Advisor is not authorized by the Fund to take any action, including
the purchase or sale of securities for the Fund, in contravention of any
restriction, limitation, objective, policy or instruction described in the
previous sentence. The Advisor shall maintain on behalf of the Fund the records
listed in Schedule A hereto (as amended from time to time). At the Trust's
reasonable request, the Advisor will consult with the Manager with respect to
any decision made by it with respect to the investments of the Fund.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will
provide the Advisor with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of
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1933, and any instructions adopted by the Board of Trustees supplemental
thereto. The Trust will provide the Advisor with such further information
concerning the investment objectives, policies and restrictions applicable
thereto as the Advisor may from time to time reasonably request. The Trust
retains the right, on written notice to the Advisor from the Trust or the
Manager, to modify any such objectives, policies or restrictions in any manner
at any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated by
payment to or delivery by the Custodian, or such depositories or agents as may
be designated by the Custodian in writing, as custodian for the Fund, of all
cash and/or securities due to or from the Fund, and the Advisor shall not have
possession or custody thereof. If the Manager has authorized the Advisor to
place orders for portfolio transactions of the Fund, the Advisor shall advise
the Custodian and confirm in writing to the Trust and to the Manager all
investment orders for the Fund placed by it with brokers and dealers. The
Advisor shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Advisor. It
shall be the responsibility of the Advisor to take appropriate action if the
Custodian fails to confirm in writing proper execution of the instructions.
6. ALLOCATION OF BROKERAGE. When so authorized by the Manager, the
Advisor shall have the authority and discretion to select brokers and dealers to
execute portfolio transactions initiated by the Advisor, and for the selection
of the markets on or in which the transactions will be executed.
A. In doing so, the Advisor will give primary consideration to
securing the best qualitative execution, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the
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broker or dealer. Consistent with this policy, the Advisor may select brokers or
dealers who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the other
accounts over which it exercises investment discretion. It is understood that
neither the Trust, the Manager nor the Advisor have adopted a formula for
allocation of the Fund's investment transaction business. It is also understood
that it is desirable for the Fund that the Manager and/or the Advisor have
access to supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage transactions at a
higher commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, if so
authorized by the Manager, the Advisor is authorized to place orders for the
purchase and sale of securities for the Fund with such certain brokers, subject
to review by the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice, provided that the Manager determines
in good faith that the amount of the commission is reasonable in relation to the
value of the brokerage and research services provided by the executing broker or
dealer. The determination may be viewed in terms of either a particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to the other accounts over which it exercises investment discretion. It is
understood that although the information may be useful to the Trust, the Manager
and the Advisor, it is not possible to place a dollar value on such information.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution, the
Manager may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions of the Fund.
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On occasions when the Advisor deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Advisor, if so
authorized by the Manager and to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as expenses incurred in the
transaction, will be made by the Advisor in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund with
respect to the Fund and to such other clients.
For each fiscal quarter of the Fund, the Advisor shall prepare and render
reports to the Manager and the Trust's Board of Trustees of the total brokerage
business placed by the Advisor and the manner in which the allocation has been
accomplished. Such reports shall set forth at a minimum the information required
to be maintained by Rule 31a-1(b)(9) under the Act.
B. Advisor agrees that it will not execute any portfolio transactions
for the Fund's account with a broker or dealer which is an "affiliated person"
(as defined in the Act) of the Trust, the Manager or the Advisor without the
prior approval of the Manager. The Manager agrees that it will provide the
Advisor with a list of brokers and dealers which are "affiliated persons" of the
Trust, the Manager or the Advisor.
7. PROXIES. The Trust will vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Fund may be invested from
time to time. At the Fund's request, the Advisor shall provide the Trust with
its recommendations as to the voting of such proxies.
8. REPORTS TO THE ADVISOR. The Trust will provide the Advisor with such
periodic reports concerning the status of the Fund as the Advisor may reasonably
request.
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9. FEES FOR SERVICES. For the services provided to the Fund, the Manager
shall pay the Advisor a fee equal to the annual rate of 60/100 of 1% of the
average value of the daily net assets of the Fund up to and including
$50,000,000, 50/100 of 1% of the next $50 million of such assets, 40/100 of 1%
of the next $100 million of such assets, and 35/100 of 1% of such assets in
excess of $200,000,000.
The Advisor's fees shall be payable monthly within ten days following the
end of each month. Pursuant to the provisions of the Investment Advisory
Agreement between the Trust and the Manager, the Manager is solely responsible
for the payment of fees to the Advisor, and the Trust shall not be obligated to
the Advisor with respect to its compensation.
10. OTHER INVESTMENT ACTIVITIES OF THE ADVISOR. The Trust acknowledges
that the Advisor or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Advisor, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Advisor or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that the Advisor acts
in good faith, and provided further, that it is the Advisor's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
over a period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the Fund
and any specific investment restrictions applicable thereto. The Trust
acknowledges that one or more of the Affiliated Accounts may at any time hold,
acquire, increase, decrease, dispose of or
6
<PAGE>
otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which involve the Fund or
otherwise. The Advisor shall have no obligation to acquire for the Fund a
position in any investment which any Affiliated Account may acquire, and the
Trust shall have no first refusal, co-investment or other rights in respect of
any such investment, either for the Fund or otherwise.
11. CERTIFICATE OF AUTHORITY. The Trust, the Manager and the Advisor shall
furnish to each other from time to time certified copies of the resolutions of
their Board of Trustees or Board of Directors or executive committees, as the
case may be, evidencing the authority of officers and employees who are
authorized to act on behalf of the Trust, the Fund, the Manager and/or the
Advisor.
12. LIMITATION OF LIABILITY. The Advisor (including its directors,
officers, shareholders, employees, control persons and affiliates of any
thereof) shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Advisor in the performance of its duties
or from the reckless disregard by the Advisor of its obligations and duties
under this Agreement ("disabling conduct"). However, the Advisor will not be
indemnified for any liability unless (1) a final decision is made on the merits
by a court or other body before whom the proceeding was brought that the Advisor
was not liable by reason of disabling conduct, or (2) in the absence of such a
decision, a reasonable determination is made, based upon a review of the facts,
that the Advisor was not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Act nor parties to the proceeding ("disinterested,
non-party trustees"), or (b) an independent legal counsel in a written
7
<PAGE>
opinion. The Fund will advance attorneys' fees or other expenses incurred by the
Advisor in defending a proceeding, upon the undertaking by or on behalf of the
Advisor to repay the advance unless it is ultimately determined that the Advisor
is entitled to indemnification, so long as the Advisor meets at least one of the
following as a condition to the advance: (1) the Advisor shall provide a
security for its undertaking, (2) the Fund shall be insured against losses
arising by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested, non-party trustees of the Trust, or an independent legal counsel
in a written opinion, shall determine, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to believe
that the Advisor ultimately will be found entitled to indemnification. Any
person employed by the Advisor who may also be or become an employee of the
Trust shall be deemed, when acting within the scope of his employment by the
Trust, to be acting in such employment solely for the Trust and not as the
Advisor's employee or agent.
13. CONFIDENTIALITY. Subject to the duty of the Advisor and the Trust to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Advisor and the
Trust in respect thereof.
14. ASSIGNMENT. No assignment of this Agreement shall be made by the
Advisor, and this Agreement shall terminate automatically in the event of such
assignment. The Advisor shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Advisor.
15. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
8
<PAGE>
A. The Advisor has been duly appointed by the Board of Trustees of the
Trust to provide investment services to the Fund as contemplated hereby.
B. The Trust will deliver to the Advisor a true and complete copy of
its then current prospectus and statement of additional information as effective
from time to time and such other documents or instruments governing the
investments of the Fund and such other information as is necessary for the
Advisor to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times comply
with the requirements imposed upon the Fund by applicable laws and regulations.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISOR. The Advisor
represents, warrants and agrees that:
A. The Advisor is registered as an "investment advisor" under the
Investment Advisors Act of 1940.
B. The Advisor will maintain, keep current and preserve on behalf of
the Fund, in the manner and for the time periods required or permitted by the
Act, the records identified in Schedule A. The Advisor agrees that such records
(unless otherwise indicated on Schedule A) are the property of the Trust, and
will be surrendered to the Trust promptly upon request.
C. The Advisor will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the Manager or the Trust may from
time to time require to ensure compliance with the Act, the Internal Revenue
Code and applicable state securities laws.
D. The Advisor will adopt a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Trust with a copy
of the code of ethics and evidence of its adoption. Within forty-five (45) days
of the end of the last calendar
9
<PAGE>
quarter of each year while this Agreement is in effect, the president or a vice
president of the Advisor shall certify to the Trust that the Advisor has
complied with the requirements of Rule 17j-1 during the previous year and that
there have been no violations of the Advisor's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of the Trust, the Advisor shall submit to
the Trust the reports required to be made to the Advisor by Rule 17j-1(c)(1).
E. The Advisor will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust and to the Manager.
F. Upon request of the Trust, the Advisor will provide assistance to
the Custodian in the collection of income due or payable to the Fund. With
respect to income from foreign sources, the Advisor will undertake any
reasonable procedural steps required to reduce, eliminate or reclaim non-U.S.
withholding taxes under the terms of applicable United States income tax
treaties.
G. The Advisor will immediately notify the Trust and the Manager of
the occurrence of any event which would disqualify the Advisor from serving as
an investment advisor of an investment company pursuant to Section 9(a) of the
Act or otherwise.
17. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Advisor and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Board of Trustees
and the shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
10
<PAGE>
18. EFFECTIVE DATE; TERM. This Agreement shall become effective on the
date of its execution and shall remain in force until May 1, 2002 and from year
to year thereafter but only so long as such continuance is specifically approved
at least annually by the vote of a majority of the Trustees who are not
interested persons of the Trust, the Manager or the Advisor, cast in person at a
meeting called for the purpose of voting on such approval, and by a vote of the
Board of Trustees or of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that this Agreement may be continued "annually"
shall be construed in a manner consistent with the Act and the rules and
regulations thereunder.
19. TERMINATION. This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon written notice to the other
in the event of a breach of any provision thereof by the party so notified, or
otherwise upon sixty (60) days' written notice to the other, but any such
termination shall not affect the status, obligations or liabilities of any party
hereto to the other.
20. SHAREHOLDER LIABILITY. The Advisor is hereby expressly put on notice
of the limitation of shareholder liability as set forth in the Declaration of
Trust of the Trust and agrees that obligations assumed by the Trust pursuant to
this Agreement shall be limited in all cases to the Fund and its assets. The
Advisor agrees that it shall not seek satisfaction of any such obligations from
the shareholders or any individual shareholder of the Fund, nor from the
Trustees or any individual Trustee of the Trust.
21. DEFINITIONS. As used in paragraphs 14 and 18 of this Agreement, the
terms "assignment," interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
11
<PAGE>
22. APPLICABLE LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State of Ohio.
TOUCHSTONE ADVISORS, INC. TOUCHSTONE STRATEGIC TRUST
By: /s/ Jill T. McGruder By: /s/ Jill T. McGruder
-------------------- -----------------------
Title: President Title: President
Date: May 1, 2000 Date: May 1, 2000
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
MASTRAPASQUA & ASSOCIATES, INC.
By: /s/ Frank Mastrapasqua
---------------------------
Title: Chairman
Date: May 1, 2000
12
<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISOR
---------------------------------------
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Advisor on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) the Manager;
(c) the Advisor;
(d) any other portfolio advisor of the Trust; and
(e) any person affiliated with the foregoing persons.
(iii)Any other consideration other than the technical qualifications
of the brokers and dealers as such.
13
<PAGE>
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisors by rules adopted under
Section 204 of the Investment Advisors Act of 1940, to the extent such
records are necessary or appropriate to record the Advisor's transactions
with respect to the Fund.
-----------------
*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio advisor reviews.
14
<PAGE>
SUBADVISORY AGREEMENT
Mastrapasqua & Associates, Inc.
814 Church Street
Nashville, TN 37203
Gentlemen:
Touchstone Strategic Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into separate series or funds. Each such share of a fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that fund. Each
fund has separate investment objectives and policies. The Aggressive Growth Fund
(the "Fund") has been established as a series of the Trust.
Touchstone Advisors, Inc. (the "Manager") acts as the investment manager
for the Fund pursuant to the terms of an Investment Advisory Agreement. The
Manager is responsible for the coordination of investment of the Fund's assets
in portfolio securities. However, specific portfolio purchases and sales for the
investment portfolio of the Fund are to be made by advisory organizations
recommended by the Manager and approved by the Board of Trustees of the Trust.
1. APPOINTMENT AS AN ADVISOR. The Trust being duly authorized hereby
appoints and employs Mastrapasqua & Associates, Inc. (the "Advisor") as the
discretionary portfolio manager of the Fund, on the terms and conditions set
forth herein.
<PAGE>
2. ACCEPTANCE OF APPOINTMENT; STANDARD OF PERFORMANCE. The Advisor
accepts the appointment as the discretionary portfolio manager and agrees to use
its best professional judgment to make timely investment decisions for the Fund
in accordance with the provisions of this Agreement.
3. PORTFOLIO MANAGEMENT SERVICES OF ADVISOR. The Advisor is hereby
employed and authorized to select portfolio securities for investment by the
Fund, to purchase and sell securities of the Fund, and upon making any purchase
or sale decision, to place orders for the execution of such portfolio
transactions in accordance with paragraphs 5 and 6 hereof. In providing
portfolio management services to the Fund, the Advisor shall be subject to such
investment restrictions as are set forth in the Act and the rules thereunder,
the Internal Revenue Code, applicable state securities laws, the supervision and
control of the Board of Trustees of the Trust, such specific instructions as the
Board of Trustees may adopt and communicate to the Advisor, the investment
objectives, policies and restrictions of the Fund furnished pursuant to
paragraph 4, the provisions of Schedule A hereto and instructions from the
Manager. The Advisor is not authorized by the Fund to take any action, including
the purchase or sale of securities for the Fund, in contravention of any
restriction, limitation, objective, policy or instruction described in the
previous sentence. The Advisor shall maintain on behalf of the Fund the records
listed in Schedule A hereto (as amended from time to time). At the Trust's
reasonable request, the Advisor will consult with the Manager with respect to
any decision made by it with respect to the investments of the Fund.
4. INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS. The Trust will
provide the Advisor with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of
2
<PAGE>
1933, and any instructions adopted by the Board of Trustees supplemental
thereto. The Trust will provide the Advisor with such further information
concerning the investment objectives, policies and restrictions applicable
thereto as the Advisor may from time to time reasonably request. The Trust
retains the right, on written notice to the Advisor from the Trust or the
Manager, to modify any such objectives, policies or restrictions in any manner
at any time.
5. TRANSACTION PROCEDURES. All transactions will be consummated by
payment to or delivery by the Custodian, or such depositories or agents as may
be designated by the Custodian in writing, as custodian for the Fund, of all
cash and/or securities due to or from the Fund, and the Advisor shall not have
possession or custody thereof. If the Manager has authorized the Advisor to
place orders for portfolio transactions of the Fund, the Advisor shall advise
the Custodian and confirm in writing to the Trust and to the Manager all
investment orders for the Fund placed by it with brokers and dealers. The
Advisor shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Advisor. It
shall be the responsibility of the Advisor to take appropriate action if the
Custodian fails to confirm in writing proper execution of the instructions.
6. ALLOCATION OF BROKERAGE. When so authorized by the Manager, the
Advisor shall have the authority and discretion to select brokers and dealers to
execute portfolio transactions initiated by the Advisor, and for the selection
of the markets on or in which the transactions will be executed.
A. In doing so, the Advisor will give primary consideration to
securing the best qualitative execution, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the
3
<PAGE>
broker or dealer. Consistent with this policy, the Advisor may select brokers or
dealers who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the other
accounts over which it exercises investment discretion. It is understood that
neither the Trust, the Manager nor the Advisor have adopted a formula for
allocation of the Fund's investment transaction business. It is also understood
that it is desirable for the Fund that the Manager and/or the Advisor have
access to supplemental investment and market research and security and economic
analyses provided by certain brokers who may execute brokerage transactions at a
higher commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest commission. Therefore, if so
authorized by the Manager, the Advisor is authorized to place orders for the
purchase and sale of securities for the Fund with such certain brokers, subject
to review by the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice, provided that the Manager determines
in good faith that the amount of the commission is reasonable in relation to the
value of the brokerage and research services provided by the executing broker or
dealer. The determination may be viewed in terms of either a particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to the other accounts over which it exercises investment discretion. It is
understood that although the information may be useful to the Trust, the Manager
and the Advisor, it is not possible to place a dollar value on such information.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution, the
Manager may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions of the Fund.
4
<PAGE>
On occasions when the Advisor deems the purchase or sale of a security to
be in the best interest of the Fund as well as other clients, the Advisor, if so
authorized by the Manager and to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the securities
to be sold or purchased in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. In such event, allocation of the
securities so purchased or sold, as well as expenses incurred in the
transaction, will be made by the Advisor in the manner it considers to be the
most equitable and consistent with its fiduciary obligations to the Fund with
respect to the Fund and to such other clients.
For each fiscal quarter of the Fund, the Advisor shall prepare and render
reports to the Manager and the Trust's Board of Trustees of the total brokerage
business placed by the Advisor and the manner in which the allocation has been
accomplished. Such reports shall set forth at a minimum the information required
to be maintained by Rule 31a-1(b)(9) under the Act.
B. Advisor agrees that it will not execute any portfolio transactions
for the Fund's account with a broker or dealer which is an "affiliated person"
(as defined in the Act) of the Trust, the Manager or the Advisor without the
prior approval of the Manager. The Manager agrees that it will provide the
Advisor with a list of brokers and dealers which are "affiliated persons" of the
Trust, the Manager or the Advisor.
7. PROXIES. The Trust will vote all proxies solicited by or with respect
to the issuers of securities in which assets of the Fund may be invested from
time to time. At the Fund's request, the Advisor shall provide the Trust with
its recommendations as to the voting of such proxies.
8. REPORTS TO THE ADVISOR. The Trust will provide the Advisor with such
periodic reports concerning the status of the Fund as the Advisor may reasonably
request.
5
<PAGE>
9. FEES FOR SERVICES. For the services provided to the Fund, the Manager
shall pay the Advisor a fee equal to the annual rate of 60/100 of 1% of the
average value of the daily net assets of the Fund up to and including
$50,000,000, 50/100 of 1% of the next $50 million of such assets, 40/100 of 1%
of the next $100 million of such assets, and 35/100 of 1% of such assets in
excess of $200,000,000.
The Advisor's fees shall be payable monthly within ten days following the
end of each month. Pursuant to the provisions of the Investment Advisory
Agreement between the Trust and the Manager, the Manager is solely responsible
for the payment of fees to the Advisor, and the Trust shall not be obligated to
the Advisor with respect to its compensation.
10. OTHER INVESTMENT ACTIVITIES OF THE ADVISOR. The Trust acknowledges
that the Advisor or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Advisor, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Advisor or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that the Advisor acts
in good faith, and provided further, that it is the Advisor's policy to
allocate, within its reasonable discretion, investment opportunities to the Fund
over a period of time on a fair and equitable basis relative to the Affiliated
Accounts, taking into account the investment objectives and policies of the Fund
and any specific investment restrictions applicable thereto. The Trust
acknowledges that one or more of the Affiliated Accounts may at any time hold,
acquire, increase, decrease, dispose of or
6
<PAGE>
otherwise deal with positions in investments in which the Fund may have an
interest from time to time, whether in transactions which involve the Fund or
otherwise. The Advisor shall have no obligation to acquire for the Fund a
position in any investment which any Affiliated Account may acquire, and the
Trust shall have no first refusal, co-investment or other rights in respect of
any such investment, either for the Fund or otherwise.
11. CERTIFICATE OF AUTHORITY. The Trust, the Manager and the Advisor shall
furnish to each other from time to time certified copies of the resolutions of
their Board of Trustees or Board of Directors or executive committees, as the
case may be, evidencing the authority of officers and employees who are
authorized to act on behalf of the Trust, the Fund, the Manager and/or the
Advisor.
12. LIMITATION OF LIABILITY. The Advisor (including its directors,
officers, shareholders, employees, control persons and affiliates of any
thereof) shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Advisor in the performance of its duties
or from the reckless disregard by the Advisor of its obligations and duties
under this Agreement ("disabling conduct"). However, the Advisor will not be
indemnified for any liability unless (1) a final decision is made on the merits
by a court or other body before whom the proceeding was brought that the Advisor
was not liable by reason of disabling conduct, or (2) in the absence of such a
decision, a reasonable determination is made, based upon a review of the facts,
that the Advisor was not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Act nor parties to the proceeding ("disinterested,
non-party trustees"), or (b) an independent legal counsel in a written
7
<PAGE>
opinion. The Fund will advance attorneys' fees or other expenses incurred by the
Advisor in defending a proceeding, upon the undertaking by or on behalf of the
Advisor to repay the advance unless it is ultimately determined that the Advisor
is entitled to indemnification, so long as the Advisor meets at least one of the
following as a condition to the advance: (1) the Advisor shall provide a
security for its undertaking, (2) the Fund shall be insured against losses
arising by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested, non-party trustees of the Trust, or an independent legal counsel
in a written opinion, shall determine, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to believe
that the Advisor ultimately will be found entitled to indemnification. Any
person employed by the Advisor who may also be or become an employee of the
Trust shall be deemed, when acting within the scope of his employment by the
Trust, to be acting in such employment solely for the Trust and not as the
Advisor's employee or agent.
13. CONFIDENTIALITY. Subject to the duty of the Advisor and the Trust to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Advisor and the
Trust in respect thereof.
14. ASSIGNMENT. No assignment of this Agreement shall be made by the
Advisor, and this Agreement shall terminate automatically in the event of such
assignment. The Advisor shall notify the Trust in writing sufficiently in
advance of any proposed change of control, as defined in Section 2(a)(9) of the
Act, as will enable the Trust to consider whether an assignment will occur, and
to take the steps necessary to enter into a new contract with the Advisor.
15. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE TRUST. The Trust
represents, warrants and agrees that:
8
<PAGE>
A. The Advisor has been duly appointed by the Board of Trustees of the
Trust to provide investment services to the Fund as contemplated hereby.
B. The Trust will deliver to the Advisor a true and complete copy of
its then current prospectus and statement of additional information as effective
from time to time and such other documents or instruments governing the
investments of the Fund and such other information as is necessary for the
Advisor to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times comply
with the requirements imposed upon the Fund by applicable laws and regulations.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ADVISOR. The Advisor
represents, warrants and agrees that:
A. The Advisor is registered as an "investment advisor" under the
Investment Advisors Act of 1940.
B. The Advisor will maintain, keep current and preserve on behalf of
the Fund, in the manner and for the time periods required or permitted by the
Act, the records identified in Schedule A. The Advisor agrees that such records
(unless otherwise indicated on Schedule A) are the property of the Trust, and
will be surrendered to the Trust promptly upon request.
C. The Advisor will complete such reports concerning purchases or
sales of securities on behalf of the Fund as the Manager or the Trust may from
time to time require to ensure compliance with the Act, the Internal Revenue
Code and applicable state securities laws.
D. The Advisor will adopt a written code of ethics complying with the
requirements of Rule 17j-1 under the Act and will provide the Trust with a copy
of the code of ethics and evidence of its adoption. Within forty-five (45) days
of the end of the last calendar
9
<PAGE>
quarter of each year while this Agreement is in effect, the president or a vice
president of the Advisor shall certify to the Trust that the Advisor has
complied with the requirements of Rule 17j-1 during the previous year and that
there have been no violations of the Advisor's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of the Trust, the Advisor shall submit to
the Trust the reports required to be made to the Advisor by Rule 17j-1(c)(1).
E. The Advisor will promptly after filing with the Securities and
Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust and to the Manager.
F. Upon request of the Trust, the Advisor will provide assistance to
the Custodian in the collection of income due or payable to the Fund. With
respect to income from foreign sources, the Advisor will undertake any
reasonable procedural steps required to reduce, eliminate or reclaim non-U.S.
withholding taxes under the terms of applicable United States income tax
treaties.
G. The Advisor will immediately notify the Trust and the Manager of
the occurrence of any event which would disqualify the Advisor from serving as
an investment advisor of an investment company pursuant to Section 9(a) of the
Act or otherwise.
17. AMENDMENT. This Agreement may be amended at any time, but only by
written agreement between the Advisor and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Board of Trustees
and the shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
10
<PAGE>
18. EFFECTIVE DATE; Term. This Agreement shall become effective on the
date of its execution and shall remain in force until May 1, 2002 and from year
to year thereafter but only so long as such continuance is specifically approved
at least annually by the vote of a majority of the Trustees who are not
interested persons of the Trust, the Manager or the Advisor, cast in person at a
meeting called for the purpose of voting on such approval, and by a vote of the
Board of Trustees or of a majority of the outstanding voting securities of the
Fund. The aforesaid requirement that this Agreement may be continued "annually"
shall be construed in a manner consistent with the Act and the rules and
regulations thereunder.
19. TERMINATION. This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon written notice to the other
in the event of a breach of any provision thereof by the party so notified, or
otherwise upon sixty (60) days' written notice to the other, but any such
termination shall not affect the status, obligations or liabilities of any party
hereto to the other.
20. SHAREHOLDER LIABILITY. The Advisor is hereby expressly put on notice
of the limitation of shareholder liability as set forth in the Declaration of
Trust of the Trust and agrees that obligations assumed by the Trust pursuant to
this Agreement shall be limited in all cases to the Fund and its assets. The
Advisor agrees that it shall not seek satisfaction of any such obligations from
the shareholders or any individual shareholder of the Fund, nor from the
Trustees or any individual Trustee of the Trust.
21. DEFINITIONS. As used in paragraphs 14 and 18 of this Agreement, the
terms "assignment," interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
11
<PAGE>
22. APPLICABLE LAW. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted, as
the same may be amended from time to time, this Agreement shall be administered,
construed and enforced according to the laws of the State of Ohio.
TOUCHSTONE ADVISORS, INC. TOUCHSTONE STRATEGIC TRUST
By: /s/ Jill T. McGruder By: /s/ Jill T. McGruder
---------------------- ----------------------
Title: President Title: President
Date: May 1, 2000 Date: May 1, 2000
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
MASTRAPASQUA & ASSOCIATES, INC.
By: /s/ Frank Mastrapasqua
-------------------------------
Title: Chairman
Date: May 1, 2000
12
<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISOR
---------------------------------------
1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Advisor on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) the Manager;
(c) the Advisor;
(d) any other portfolio advisor of the Trust; and
(e) any person affiliated with the foregoing persons.
(iii)Any other consideration other than the technical qualifications
of the brokers and dealers as such.
13
<PAGE>
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisors by rules adopted under
Section 204 of the Investment Advisors Act of 1940, to the extent such
records are necessary or appropriate to record the Advisor's transactions
with respect to the Fund.
-----------------
*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio advisor reviews.
14
<PAGE>
SUB-ADVISORY AGREEMENT
EMERGING GROWTH FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and DAVID L.
BABSON & COMPANY, INC., a Massachusetts corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and 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
with respect to certain assets of the Emerging Growth Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it
with portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of that portion of the
assets of the Fund allocated to it by the Advisor (which portion, until changed
by the Advisor by not less than ten days prior written notice, shall be 50% of
the total assets of the Fund) (the said portion, as it may be changed from time
to time, being herein called the "Fund Assets"), subject to the control and
direction of the Advisor and the Trust's Board of Trustees, for the period and
on the terms hereinafter set forth. The Sub-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The Sub-Advisor shall at all times maintain its registration as an investment
advisor under the Investment Advisers Act of 1940 and shall otherwise comply in
all material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
<PAGE>
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 Fund Assets, 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 Fund Assets and the purchase and sale of portfolio securities
and shall take such steps as may be necessary or advisable to implement
the same. The Sub-Advisor also will determine the manner in which
voting rights, rights to consent to corporate action and any other
rights pertaining to the portfolio securities will be exercised. The
Sub-Advisor will render regular reports to the Trust's Board of
Trustees 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; provided, however, that in the absence of extraordinary
circumstances, the individual primarily responsible for management of
the Fund Assets for the Sub-Advisor will not be required to attend in
person more than one meeting per year with the trustees of the Trust.
b. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not limited to: (i)
permission to use the Sub-Advisor's name as provided in Section 5, (ii)
permission to use the past performance and investment history of the
Sub-Advisor with respect to a composite of other portfolios managed by
the Sub-Advisor that are comparable, in investment objective and
composition, to the Fund, (iii) access to the individual(s) responsible
for day-to-day management of the Fund for marketing conferences,
teleconferences and other activities involving the promotion of the
Fund, subject to the reasonable request of the Advisor, (iv) permission
to use biographical and historical data of the Sub-Advisor and
individual manager(s), and (v) permission to use the names of clients
pre-approved by the Sub-Advisor to which the Sub-Advisor provides
investment management services, subject to receipt of the consent of
such clients to the use of their names.
c. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in accordance with the
policies with respect thereto set forth in the Trust's registration
statements under the 1940 Act and the Securities Act of 1933, as such
registration statements may be in effect from time to time. In
connection with the placement of orders for the execution of portfolio
transactions, the Sub-Advisor will create and maintain all necessary
brokerage records of the Fund in accordance with all applicable laws,
rules and regulations, including but not limited to records required by
Section 31(a) of the 1940 Act. All records shall be the property of the
Trust and shall be available for inspection and use by the Securities
and Exchange Commission (the "SEC"), the Trust or any person retained
by the Trust. Where applicable, such records shall be maintained by the
Advisor for the periods and in the places required by Rule 31a-2 under
the 1940 Act. When placing orders with brokers and dealers, the
Sub-Advisor's primary objective shall be to obtain the most favorable
price and execution available for the Fund, and in placing such orders
the Sub-Advisor may consider a number of factors, including, without
limitation, the overall direct net economic result to the Fund
(including commissions, which may not be the lowest available but
ordinarily should not be higher than the generally prevailing
competitive range), the financial strength and stability of the broker,
the efficiency with which the transaction will be effected, the ability
to effect the transaction at all where a large block is involved and
the availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized,
to the extent authorized by law (including, without limitation, Section
28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), to pay a broker or dealer who provides research services to the
Sub-Advisor an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting such transaction, in
recognition of such additional research services rendered by the broker
or dealer, but only if the Sub-Advisor determines in good faith that
the excess commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer
viewed in terms of the particular transaction or the Sub-Advisor's
overall responsibilities with respect to discretionary accounts that it
manages, and that the Fund derives or will derive a reasonably
significant benefit from such research services. The Sub-Advisor will
present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such
expenses, broken down by broker-dealer and containing such information
as the Board of Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than
30 days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing
services to the Fund pursuant to this Agreement except such expenses as
are undertaken by the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the
investment and reinvestment of such assets so as to comply with the
provisions of the 1940 Act and with Subchapter M of the Internal
Revenue Code of 1986, as amended.
<PAGE>
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.50% of the
average daily net Fund Assets. Such fee shall be computed and accrued
daily. If the Sub-Advisor serves in such capacity for less than the
whole of any period specified in this Section 3a, the compensation to
the Sub-Advisor shall be prorated. For purposes of calculating the
Sub-Advisor's fee, the daily value of the Fund Assets shall be computed
by the same method as the Trust uses to compute the net asset value of
the Fund for purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part
of its fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request, subject to the limitation on
personal attendance at such meetings set forth in Section 2a) (i) the financial
condition and prospects of the Sub-Advisor, (ii) the nature and amount of
transactions affecting the Fund that involve the Sub-Advisor and affiliates of
the Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. The Sub-Advisor
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of business among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the
Trust as a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the
name of the Sub-Advisor in any prospectus, sales literature or other material
relating to the Advisor or the Trust in any manner not approved in
advance by the Sub-Advisor; provided, however, that the Sub-Advisor will
approve all uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by the SEC or a state securities
commission; and provided further, that in no event shall such approval be
unreasonably withheld. The Sub-Advisor shall not use the name of the Advisor
or the Trust in any material relating to the Sub-Advisor in any manner not
approved in advance by the Advisor or the Trust, as the case may be; provided,
however, that the Advisor and the Trust shall each approve all uses of their
respective names which merely refer in accurate terms to the appointment of the
Sub-Advisor hereunder or which are required by the SEC or a state securities
commission; and, provided further, that in no event shall such approval be
unreasonably withheld.
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that
it has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided for a period of two years from the
date hereof and it shall continue thereafter provided that such
continuance is specifically approved by the parties and, in addition,
at least annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the Fund or by
vote of a majority of the Trust's Board of Trustees and (ii) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of either the Advisor or the
Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the Fund, in any such case upon not less than 60 days'
prior written notice to the Sub-Advisor and (ii) by the Sub-Advisor
upon not less than 60 days' prior written notice to the Advisor and the
Trust. This Agreement shall terminate automatically in the event of its
assignment.
c. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Fund affected by
such change.
d. The terms "assignment," "interested persons" and "majority
of the outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
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, OH 45202 and that the
address of the Sub-Advisor shall be One Memorial Drive, Cambridge, Massachusetts
02142.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
----------------------
Name: Jill T. McGruder
Title: President
DAVID L. BABSON & COMPANY, INC.
By: /s/ John W. Filoon
------------------------
Name: John W. Filoon
Title: Vice President
<PAGE>
SUB-ADVISORY AGREEMENT
EMERGING GROWTH FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and WESTFIELD
CAPITAL MANAGEMENT COMPANY, INC., a Massachusetts corporation (the
"Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and 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
with respect to certain assets of the Emerging Growth Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it
with portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of that portion of the
assets of the Fund allocated to it by the Advisor (such portion being herein
called the "Fund Assets"), subject to the control and direction of the Advisor
and the Trust's Board of Trustees, for the period and on the terms hereinafter
set forth. The Sub-Advisor hereby accepts such employment and agrees during such
period to render the services and to perform the duties called for by this
Agreement for the compensation herein provided. The Sub-Advisor shall at all
times maintain its registration as an investment advisor under the Investment
Advisers Act of 1940 and shall otherwise comply in all material respects with
all applicable laws and regulations, both state and federal. The Sub-Advisor
shall for all purposes herein be deemed an independent contractor and shall,
except as expressly provided or authorized (whether herein or otherwise), have
no authority to act for or represent the Trust in any way or otherwise be deemed
an agent of the Trust or the Fund.
<PAGE>
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 Fund Assets, 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 Fund Assets and the purchase and sale of portfolio securities
and shall take such steps as may be necessary or advisable to implement
the same. The Sub-Advisor also will determine the manner in which
voting rights, rights to consent to corporate action and any other
rights pertaining to the portfolio securities will be exercised. The
Sub-Advisor will render regular reports to the Trust's Board of
Trustees 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 those institutional clients to which the Sub-Advisor provides
investment management services, subject to receipt of the consent of
such clients to the use of their names.
c. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in accordance with the
policies with respect thereto set forth in the Trust's registration
statements under the 1940 Act and the Securities Act of 1933, as such
registration statements may be in effect from time to time. In
connection with the placement of orders for the execution of portfolio
transactions, the Sub-Advisor will create and maintain all necessary
brokerage records of the Fund in accordance with all applicable laws,
rules and regulations, including but not limited to records required by
Section 31(a) of the 1940 Act. All records shall be the property of the
Trust and shall be available for inspection and use by the Securities
and Exchange Commission (the "SEC"), the Trust or any person retained
by the Trust. Where applicable, such records shall be maintained by the
Advisor for the periods and in the places required by Rule 31a-2 under
the 1940 Act. When placing orders with brokers and dealers, the
Sub-Advisor's primary objective shall be to obtain the most favorable
price and execution available for the Fund, and in placing such orders
the Sub-Advisor may consider a number of factors, including, without
limitation, the overall direct net economic result to the Fund
(including commissions, which may not be the lowest available but
ordinarily should not be higher than the generally prevailing
competitive range), the financial strength and stability of the broker,
the efficiency with which the transaction will be effected, the ability
to effect the transaction at all where a large block is involved and
the availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. Consistent with the
Conduct Rules of the National Association of Securities Dealers, Inc.,
and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized,
to the extent authorized by law (including, without limitation, Section
28(e) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), to pay a broker or dealer who provides research services to the
Sub-Advisor an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting such transaction, in
recognition of such additional research services rendered by the broker
or dealer, but only if the Sub-Advisor determines in good faith that
the excess commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer
viewed in terms of the particular transaction or the Sub-Advisor's
overall responsibilities with respect to discretionary accounts that it
manages, and that the Fund derives or will derive a reasonably
significant benefit from such research services. The Sub-Advisor will
present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such
expenses, broken down by broker-dealer and containing such information
as the Board of Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than
30 days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing
services to the Fund pursuant to this Agreement except such expenses as
are undertaken by the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the
investment and reinvestment of such assets so as to comply with the
provisions of the 1940 Act and with Subchapter M of the Internal
Revenue Code of 1986, as amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.45% of the
first $10 million of the average daily net assets of the Fund managed
by the Sub-Advisor, 0.40% of the average daily net assets of the Fund
managed by the Sub-Advisor in excess of $10 million and up to $50
million and 0.35% of the average daily net assets of the Fund managed
by the Sub-Advisor in excess of $50 million. Such fee shall be computed
and accrued daily. If the Sub-Advisor serves in such capacity for less
than the whole of any period specified in this Section 3a, the
compensation to the Sub-Advisor shall be prorated. For purposes of
calculating the Sub-Advisor's fee, the daily value of the Fund's net
assets shall be computed by the same method as the Trust uses to
compute the net asset value of the Fund for purposes of purchases and
redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part
of its fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Sub-Advisor and affiliates of the
Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. At least
annually, the Sub-Advisor shall report to the Trustees information regarding the
composite return of such of its other accounts as are comparable, in investment
objective and composition, to the Fund. The Sub-Advisor agrees to submit to the
Trust a statement defining its policies with respect to the allocation of
investment opportunities among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the
Trust as a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name
of the Sub-Advisor in any prospectus, sales literature or other material
relating to the Advisor or the Trust in any manner not approved in
advance by the Sub-Advisor; provided, however, that the Sub-Advisor will
approve all uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by the SEC or a state securities
commission; and provided further, that in no event shall such approval be
unreasonably withheld. The Sub-Advisor shall not use the name of the Advisor
or the Trust in any material relating to the Sub-Advisor in any manner not
approved in advance by the Advisor or the Trust, as the case may be; provided,
however, that the Advisor and the Trust shall each approve all uses of their
respective names which merely refer in accurate terms to the appointment of the
Sub-Advisor hereunder or which are required by the SEC or a state securities
commission; and, provided further, that in no event shall such approval be
unreasonably withheld.
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that
it has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided for a period of two years from the
date hereof and it shall continue thereafter provided that such
continuance is specifically approved by the parties and, in addition,
at least annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the Fund or by
vote of a majority of the Trust's Board of Trustees and (ii) by the
vote of a majority of the Trustees who are not parties to this
Agreement or interested persons of either the Advisor or the
Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the Fund, in any such case upon not less than 60 days'
prior written notice to the Sub-Advisor and (ii) by the Sub-Advisor
upon not less than 60 days' prior written notice to the Advisor and the
Trust. This Agreement shall terminate automatically in the event of its
assignment.
c. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Fund affected by
such change.
d. The terms "assignment," "interested persons" and "majority
of the outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
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, OH 45202 and that the
address of the Sub-Advisor shall be One Financial Center, 27th Floor, Boston,
Massachusetts 02111.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
---------------------
Name: Jill T. McGruder
Title: President
WESTFIELD CAPITAL MANAGEMENT COMPANY, INC.
By: /s/ William A. Muggia
----------------------
Name: William A. Muggia
Title: Senior Vice President
<PAGE>
SUB-ADVISORY AGREEMENT
INTERNATIONAL EQUITY FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and CREDIT
SUISSE ASSET MANAGEMENT LLC, a New York limited liability corporation (the
"Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and 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 International Equity Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it with
portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to it by the Advisor (the "Fund Assets"), subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Sub-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The Sub-Advisor shall at all times maintain its registration as an investment
advisor under the Investment Advisers Act of 1940 and shall otherwise comply in
all material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
<PAGE>
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, subject to
the limitation that the individual primarily responsible for management of
the Fund Assets for the Fund Advisor will not be required to attend more
than one meeting of the Trust's Trustees in any one year, (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
-2-
<PAGE>
Sub-Advisor's primary objective shall be to obtain the most favorable price
and execution available for the Fund, and in placing such orders the
Sub-Advisor may consider a number of factors, including, without
limitation, the overall direct net economic result to the Fund (including
commissions, which may not be the lowest available but ordinarily should
not be higher than the generally prevailing competitive range), the
financial strength and stability of the broker, the efficiency with which
the transaction will be effected, the ability to effect the transaction at
all where a large block is involved and the availability of the broker or
dealer to stand ready to execute possibly difficult transactions in the
future. Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking the most favorable price
and execution, the Sub-Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions of the Fund. The Sub-Advisor is specifically
authorized, to the extent authorized by law (including, without limitation,
Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), to pay a broker or dealer who provides research services
to the Sub-Advisor an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or dealer
would have charged for effecting such transaction, in recognition of such
additional research services rendered by the broker or dealer, but only if
the Sub-Advisor determines in good faith that the excess commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer viewed in terms of the particular
transaction or the Sub-Advisor's overall responsibilities with respect to
discretionary accounts that it manages, and that the Fund derives or will
derive a reasonably significant benefit from such research services. The
Sub-Advisor will present a written report to the Board of Trustees of the
Trust, at least quarterly, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such
expenses, broken down by broker-dealer and containing such information as
the Board of Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than 30
days) after such reorganization or change. In addition, the Sub-Advisor
will notify the Advisor of any change in the membership of the Sub-Advisor
within a reasonable time (but not more than 30 days) after such change
takes place.
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. Based on account information regarding the Fund provided by the
Advisor, 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;
provided, however,
-3-
<PAGE>
that with respect to provisions of the 1940 Act regarding transactions with
affiliates, the obligations of the Sub-Advisor shall be limited to matters
involving its own affiliates and such other persons as the Advisor shall
expressly identify as affiliated persons.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.85% of the first
$30 million of the average daily net assets of the Fund, 0.80% of the
average daily net assets of the Fund in excess of $30 million and up to $50
million, 0.70% of the average daily net assets of the Fund in excess of $50
million and up to $70 million, and 0.60% of the average daily net assets of
the Fund in excess of $70 million. Such fee shall be computed and accrued
daily. If the Sub-Advisor serves in such capacity for less than the whole
of any period specified in this Section 3a, the compensation to the
Sub-Advisor shall be prorated. For purposes of calculating the
Sub-Advisor's fee, the daily value of the Fund's net assets shall be
computed by the same method as the Trust uses to compute the net asset
value of the Fund for purposes of purchases and redemptions of shares
thereof.
b. The Sub-Advisor reserves the right to waive all or a part of its
fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Advisor and affiliates of the Sub-Advisor,
(iii) information regarding any potential conflicts of interest arising by
reason of its continuing provision of advisory services to the Fund and to its
other accounts, and (iv) such other information as the Board of Trustees shall
reasonably request regarding the Fund, the Fund's performance, the services
provided by the Sub-Advisor to the Fund as compared to its other accounts and
the plans of, and the capability of, the Sub-Advisor with respect to providing
future services to the Fund and its other accounts. The Sub-Advisor 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.
-4-
<PAGE>
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.
a. Absent willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties hereunder on the part of the
Sub-Advisor, the Sub-Advisor shall not be subject to liability to the Advisor,
the Trust or to any shareholder in the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security. As used
in this Section 6, the term "Sub-Advisor" shall include the Sub-Advisor and/or
any of its affiliates and the directors, officers and employees of the
Sub-Advisor and/or any of its affiliates.
b. The Trust or the Advisor will indemnify the Sub-Advisor against,
and hold it harmless from, any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting from its
activities under and pursuant to this Agreement, except to the extent that such
losses, claims, damages, liabilities or expenses result from the gross
negligence, bad faith or willful misfeasance of the Sub-Advisor or from a breach
of its obligations or duties hereunder. 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 or the Advisor 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 or the Advisor
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
Sub-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 Sub-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: (a) the Sub-Advisor shall provide security in form and amount acceptable to
the Trust for its undertaking; (b) the
-5-
<PAGE>
Trust is insured against losses arising by reason of the advance; or (c) 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 Sub-Advisor will ultimately be found to be entitled to
indemnification.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided for a period of two years from the date hereof and
it shall continue thereafter provided that such continuance is specifically
approved by the parties and, in addition, at least annually by (i) the vote
of the holders of a majority of the outstanding voting securities (as
herein defined) of the Fund or by vote of a majority of the Trust's Board
of Trustees and (ii) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of either the Advisor or
the Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without payment of
any penalty, (i) by the Advisor, by the Trust's Board of Trustees or by a
vote of the majority of the outstanding voting securities of the Fund, in
any such case upon not less than 60 days' prior written notice to the
Sub-Advisor and (ii) by the Sub-Advisor upon not less than 60 days' prior
written notice to the Advisor and the Trust. This Agreement shall terminate
automatically in the event of its assignment.
c. This Agreement may be amended at any time by the parties hereto,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of the majority of the
outstanding voting securities of the Fund affected by such change.
-6-
<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, OH 45202 and that the address
of the Sub-Advisor shall be One Citicorp Center, 153 East 53rd Street, New York,
NY 10022.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
------------------------------
Name: Jill T. McGruder
Title: President
CREDIT SUISSE ASSET MANAGEMENT LLC
By: /s/ Hal Liebol
------------------------------
Name: Hal Liebol
Title: General Counsel
-7-
<PAGE>
SUB-ADVISORY AGREEMENT
VALUE PLUS FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and 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 Value Plus Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it with
portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to it by the Advisor (the "Fund Assets"), subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Sub-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The Sub-Advisor shall at all times maintain its registration as an investment
advisor under the Investment Advisers Act of 1940 and shall otherwise comply in
all material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
<PAGE>
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
-2-
<PAGE>
than the generally prevailing competitive range), the financial strength
and stability of the broker, the efficiency with which the transaction will
be effected, the ability to effect the transaction at all where a large
block is involved and the availability of the broker or dealer to stand
ready to execute possibly difficult transactions in the future. Consistent
with the Conduct Rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized, to
the extent authorized by law (including, without limitation, Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
to pay a broker or dealer who provides research services to the Sub-Advisor
an amount of commission for effecting a portfolio transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting such transaction, in recognition of such additional research
services rendered by the broker or dealer, but only if the Sub-Advisor
determines in good faith that the excess commission is reasonable in
relation to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of the particular transaction or the
Sub-Advisor's overall responsibilities with respect to discretionary
accounts that it manages, and that the Fund derives or will derive a
reasonably significant benefit from such research services. The Sub-Advisor
will present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or imputed, as
well as the services obtained in consideration for such expenses, broken
down by broker-dealer and containing such information as the Board of
Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than 30
days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing services to
the Fund pursuant to this Agreement except such expenses as are undertaken
by the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the investment
and reinvestment of such assets so as to comply with the provisions of the
1940 Act and with Subchapter M of the Internal Revenue Code of 1986, as
amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.45% 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-
-3-
<PAGE>
Advisor shall be prorated. For purposes of calculating the Sub-Advisor's
fee, the daily value of the Fund's net assets shall be computed by the same
method as the Trust uses to compute the net asset value of the Fund for
purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part of its
fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Sub-Advisor and affiliates of the
Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. At least
annually, the Sub-Advisor shall report to the Trustees the total number and type
of such other accounts and the approximate total asset value thereof (but not
the identities of the beneficial owners of such accounts). The Sub-Advisor
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of business among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the Trust as
a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name of
the Sub-Advisor in any prospectus, sales literature or other material relating
to the Advisor or the Trust in any manner not approved in advance by the
Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses of
its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
-4-
<PAGE>
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided for a period of two years from the date hereof and
it shall continue thereafter provided that such continuance is specifically
approved by the parties and, in addition, at least annually by (i) the vote
of the holders of a majority of the outstanding voting securities (as
herein defined) of the Fund or by vote of a majority of the Trust's Board
of Trustees and (ii) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of either the Advisor or
the Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without payment of
any penalty, (i) by the Advisor, by the Trust's Board of Trustees or by a
vote of the majority of the outstanding voting securities of the Fund, in
any such case upon not less than 60 days' prior written notice to the
Sub-Advisor and (ii) by the Sub-Advisor upon not less than 60 days' prior
written notice to the Advisor and the Trust. This Agreement shall terminate
automatically in the event of its assignment.
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
-5-
<PAGE>
regulations, a vote of the majority of the outstanding voting securities of
the Fund affected by such change.
d. The terms "assignment," "interested persons" and "majority of the
outstanding voting securities" shall have the meaning set forth for such
terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of the Advisor for
this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
--------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS
By: /s/ William F. Ledwin
----------------------
Name: William F. Ledwin
Title: President
-6-
<PAGE>
SUB-ADVISORY AGREEMENT
EQUITY FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and 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 Equity Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it with
portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to it by the Advisor (the "Fund Assets"), subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Sub-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The Sub-Advisor shall at all times maintain its registration as an investment
advisor under the Investment Advisers Act of 1940 and shall otherwise comply in
all material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
<PAGE>
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
-2-
<PAGE>
than the generally prevailing competitive range), the financial strength
and stability of the broker, the efficiency with which the transaction will
be effected, the ability to effect the transaction at all where a large
block is involved and the availability of the broker or dealer to stand
ready to execute possibly difficult transactions in the future. Consistent
with the Conduct Rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized, to
the extent authorized by law (including, without limitation, Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
to pay a broker or dealer who provides research services to the Sub-Advisor
an amount of commission for effecting a portfolio transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting such transaction, in recognition of such additional research
services rendered by the broker or dealer, but only if the Sub-Advisor
determines in good faith that the excess commission is reasonable in
relation to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of the particular transaction or the
Sub-Advisor's overall responsibilities with respect to discretionary
accounts that it manages, and that the Fund derives or will derive a
reasonably significant benefit from such research services. The Sub-Advisor
will present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or imputed, as
well as the services obtained in consideration for such expenses, broken
down by broker-dealer and containing such information as the Board of
Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than 30
days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing services to
the Fund pursuant to this Agreement except such expenses as are undertaken
by the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the investment
and reinvestment of such assets so as to comply with the provisions of the
1940 Act and with Subchapter M of the Internal Revenue Code of 1986, as
amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.45% 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-
-3-
<PAGE>
Advisor shall be prorated. For purposes of calculating the Sub-Advisor's
fee, the daily value of the Fund's net assets shall be computed by the same
method as the Trust uses to compute the net asset value of the Fund for
purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part of its
fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Sub-Advisor and affiliates of the
Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. At least
annually, the Sub-Advisor shall report to the Trustees the total number and type
of such other accounts and the approximate total asset value thereof (but not
the identities of the beneficial owners of such accounts). The Sub-Advisor
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of business among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the Trust as
a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name of
the Sub-Advisor in any prospectus, sales literature or other material relating
to the Advisor or the Trust in any manner not approved in advance by the
Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses of
its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
-4-
<PAGE>
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided for a period of two years from the date hereof and
it shall continue thereafter provided that such continuance is specifically
approved by the parties and, in addition, at least annually by (i) the vote
of the holders of a majority of the outstanding voting securities (as
herein defined) of the Fund or by vote of a majority of the Trust's Board
of Trustees and (ii) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of either the Advisor or
the Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without payment of
any penalty, (i) by the Advisor, by the Trust's Board of Trustees or by a
vote of the majority of the outstanding voting securities of the Fund, in
any such case upon not less than 60 days' prior written notice to the
Sub-Advisor and (ii) by the Sub-Advisor upon not less than 60 days' prior
written notice to the Advisor and the Trust. This Agreement shall terminate
automatically in the event of its assignment.
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
-5-
<PAGE>
regulations, a vote of the majority of the outstanding voting securities of
the Fund affected by such change.
d. The terms "assignment," "interested persons" and "majority of the
outstanding voting securities" shall have the meaning set forth for such
terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of the Advisor for
this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
---------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS
By: /s/ William F. Ledwin
-----------------------
Name: William F. Ledwin
Title: President
-6-
<PAGE>
SUB-ADVISORY AGREEMENT
UTILITY FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and FORT
WASHINGTON INVESTMENT ADVISORS, INC., an Ohio corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and 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 Utility Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it with
portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to it by the Advisor (the "Fund Assets"), subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Sub-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The Sub-Advisor shall at all times maintain its registration as an investment
advisor under the Investment Advisers Act of 1940 and shall otherwise comply in
all material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
<PAGE>
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
-2-
<PAGE>
than the generally prevailing competitive range), the financial strength
and stability of the broker, the efficiency with which the transaction will
be effected, the ability to effect the transaction at all where a large
block is involved and the availability of the broker or dealer to stand
ready to execute possibly difficult transactions in the future. Consistent
with the Conduct Rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized, to
the extent authorized by law (including, without limitation, Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
to pay a broker or dealer who provides research services to the Sub-Advisor
an amount of commission for effecting a portfolio transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting such transaction, in recognition of such additional research
services rendered by the broker or dealer, but only if the Sub-Advisor
determines in good faith that the excess commission is reasonable in
relation to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of the particular transaction or the
Sub-Advisor's overall responsibilities with respect to discretionary
accounts that it manages, and that the Fund derives or will derive a
reasonably significant benefit from such research services. The Sub-Advisor
will present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or imputed, as
well as the services obtained in consideration for such expenses, broken
down by broker-dealer and containing such information as the Board of
Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than 30
days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing services to
the Fund pursuant to this Agreement except such expenses as are undertaken
by the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the investment
and reinvestment of such assets so as to comply with the provisions of the
1940 Act and with Subchapter M of the Internal Revenue Code of 1986, as
amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.45% 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-
-3-
<PAGE>
Advisor shall be prorated. For purposes of calculating the Sub-Advisor's
fee, the daily value of the Fund's net assets shall be computed by the same
method as the Trust uses to compute the net asset value of the Fund for
purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part of its
fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Sub-Advisor and affiliates of the
Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. At least
annually, the Sub-Advisor shall report to the Trustees the total number and type
of such other accounts and the approximate total asset value thereof (but not
the identities of the beneficial owners of such accounts). The Sub-Advisor
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of business among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the Trust as
a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name of
the Sub-Advisor in any prospectus, sales literature or other material relating
to the Advisor or the Trust in any manner not approved in advance by the
Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses of
its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
-4-
<PAGE>
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided for a period of two years from the date hereof and
it shall continue thereafter provided that such continuance is specifically
approved by the parties and, in addition, at least annually by (i) the vote
of the holders of a majority of the outstanding voting securities (as
herein defined) of the Fund or by vote of a majority of the Trust's Board
of Trustees and (ii) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of either the Advisor or
the Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without payment of
any penalty, (i) by the Advisor, by the Trust's Board of Trustees or by a
vote of the majority of the outstanding voting securities of the Fund, in
any such case upon not less than 60 days' prior written notice to the
Sub-Advisor and (ii) by the Sub-Advisor upon not less than 60 days' prior
written notice to the Advisor and the Trust. This Agreement shall terminate
automatically in the event of its assignment.
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
-5-
<PAGE>
regulations, a vote of the majority of the outstanding voting securities of
the Fund affected by such change.
d. The terms "assignment," "interested persons" and "majority of the
outstanding voting securities" shall have the meaning set forth for such
terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of the Advisor for
this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 420 East Fourth Street, Cincinnati, Ohio
45202.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
--------------------
Name: Jill T. McGruder
Title: President
FORT WASHINGTON INVESTMENT ADVISORS
By: /s/ William F. Ledwin
----------------------
Name: William F. Ledwin
Title: President
-6-
<PAGE>
SUB-ADVISORY AGREEMENT
ENHANCED 30 FUND
TOUCHSTONE STRATEGIC TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2000, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and TODD
INVESTMENT ADVISORS, INC., a Kentucky corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Strategic Trust (the "Trust"), a Massachusetts business trust organized pursuant
to an Agreement and 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 Enhanced 30 Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it with
portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter set
forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to it by the Advisor (the "Fund Assets"), subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Sub-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The Sub-Advisor shall at all times maintain its registration as an investment
advisor under the Investment Advisers Act of 1940 and shall otherwise comply in
all material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
<PAGE>
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
-2-
<PAGE>
than the generally prevailing competitive range), the financial strength
and stability of the broker, the efficiency with which the transaction will
be effected, the ability to effect the transaction at all where a large
block is involved and the availability of the broker or dealer to stand
ready to execute possibly difficult transactions in the future. Consistent
with the Conduct Rules of the National Association of Securities Dealers,
Inc., and subject to seeking the most favorable price and execution, the
Sub-Advisor may give consideration to sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio
transactions of the Fund. The Sub-Advisor is specifically authorized, to
the extent authorized by law (including, without limitation, Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
to pay a broker or dealer who provides research services to the Sub-Advisor
an amount of commission for effecting a portfolio transaction in excess of
the amount of commission another broker or dealer would have charged for
effecting such transaction, in recognition of such additional research
services rendered by the broker or dealer, but only if the Sub-Advisor
determines in good faith that the excess commission is reasonable in
relation to the value of the brokerage and research services provided by
such broker or dealer viewed in terms of the particular transaction or the
Sub-Advisor's overall responsibilities with respect to discretionary
accounts that it manages, and that the Fund derives or will derive a
reasonably significant benefit from such research services. The Sub-Advisor
will present a written report to the Board of Trustees of the Trust, at
least quarterly, indicating total brokerage expenses, actual or imputed, as
well as the services obtained in consideration for such expenses, broken
down by broker-dealer and containing such information as the Board of
Trustees reasonably shall request.
d. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than 30
days) after such reorganization or change.
e. The Sub-Advisor will bear its expenses of providing services to the
Fund pursuant to this Agreement except such expenses as are undertaken by
the Advisor or the Trust.
f. The Sub-Advisor will manage the Fund assets and the investment and
reinvestment of such assets so as to comply with the provisions of the 1940
Act and with Subchapter M of the Internal Revenue Code of 1986, as amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.40% of the average
daily net assets of the Fund. Such fee shall be computed and accrued daily.
If the Sub-Advisor serves in such capacity for less than the whole of any
period specified in this Section 3a, the compensation to the Sub-
-3-
<PAGE>
Advisor shall be prorated. For purposes of calculating the Sub-Advisor's
fee, the daily value of the Fund's net assets shall be computed by the same
method as the Trust uses to compute the net asset value of the Fund for
purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part of its
fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Sub-Advisor and affiliates of the
Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. At least
annually, the Sub-Advisor shall report to the Trustees the total number and type
of such other accounts and the approximate total asset value thereof (but not
the identities of the beneficial owners of such accounts). The Sub-Advisor
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of business among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the Trust as
a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name of
the Sub-Advisor in any prospectus, sales literature or other material relating
to the Advisor or the Trust in any manner not approved in advance by the
Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses of
its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
-4-
<PAGE>
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner terminated
as hereinafter provided for a period of two years from the date hereof and
it shall continue thereafter provided that such continuance is specifically
approved by the parties and, in addition, at least annually by (i) the vote
of the holders of a majority of the outstanding voting securities (as
herein defined) of the Fund or by vote of a majority of the Trust's Board
of Trustees and (ii) by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of either the Advisor or
the Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without payment of
any penalty, (i) by the Advisor, by the Trust's Board of Trustees or by a
vote of the majority of the outstanding voting securities of the Fund, in
any such case upon not less than 60 days' prior written notice to the
Sub-Advisor and (ii) by the Sub-Advisor upon not less than 60 days' prior
written notice to the Advisor and the Trust. This Agreement shall terminate
automatically in the event of its assignment.
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
-5-
<PAGE>
regulations, a vote of the majority of the outstanding voting securities of
the Fund affected by such change.
d. The terms "assignment," "interested persons" and "majority of the
outstanding voting securities" shall have the meaning set forth for such
terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or shall
be found to be invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing addressed
and delivered personally (or by telecopy) or mailed postage-paid, to the other
party at such address as such other party may designate in accordance with this
paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of the Advisor for
this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 3160 National City Tower, Louisville,
Kentucky 40202.
12. MISCELLANEOUS. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
By: /s/ Jill T. McGruder
--------------------------
Name: Jill T. McGruder
Title: President
TODD INVESTMENT ADVISORS, INC.
By: /s/ Robert P. Bordogna
--------------------------
Name: Robert P. Bordogna
Title: President & Chief Executive Officer
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