SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Select Advisors Trust A and Select Advisors Trust C
....................................................................
(Name of Registrant/s as Specified In Its Charter)
....................................................................
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
................................................................
2) Aggregate number of securities to which transaction applies:
................................................................
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
................................................................
4) Proposed maximum aggregate value of transaction:
................................................................
5) Total fee paid:
................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
............................................
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
............................................
4) Date Filed:
............................................
TOUCHSTONE BALANCED FUND A
(a series of Select Advisors Trust A)
and
TOUCHSTONE BALANCED FUND C
(a series of Select Advisors Trust C)
311 Pike Street
Cincinnati, Ohio 45202
NOTICE OF SPECIAL MEETING
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Touchstone Balanced Fund A ("Fund A"), a separate series of
Select Advisors Trust A ("Trust A" or a "Trust"), and Shareholders of Touchstone
Balanced Fund C ("Fund C"), a separate series of Select Advisors Trust C ("Trust
C" or a "Trust"), will be held on April 23, 1997, at 10:00 a.m., Eastern
Daylight Time, at the offices of the Trusts, 311 Pike Street, Cincinnati, Ohio
45202. At the Meeting, Shareholders of Fund A and Shareholders of Fund C will
each be asked to consider and vote upon the following:
1. To approve or disapprove: (a) a new portfolio advisory
agreement between Touchstone Advisors, Inc. (the "Advisor") and
OpCap Advisors ("OpCap"), pursuant to which agreement OpCap will
act as portfolio advisor (i.e., subadvisor) with respect to the
assets of the Balanced Portfolio (the "Portfolio") of Select
Advisors Portfolios, as described in the attached Proxy Statement
(all of the investable assets of Fund A and Fund C are invested
in the Portfolio); and (b) an amendment to the existing
investment advisory agreement between Select Advisors Portfolios
(on behalf of the Portfolio) and the Advisor, pursuant to which
agreement the Advisor acts as investment advisor to the
Portfolio, as described in the attached Proxy Statement.
2. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Shareholders of record at the close of business on March 14, 1997, are
entitled to notice of, and to vote at, the Meeting. Your attention is called to
the accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD so
that a quorum will be present and a maximum number of shares may be voted. If
you are present at the Meeting, you may change your vote, if desired, at that
time.
By Order of the Board of Trustees of each Trust
Susan C. Mosher
Secretary
Cincinnati, Ohio
April 4, 1997
TOUCHSTONE BALANCED FUND A
(a series of Select Advisors Trust A)
and
TOUCHSTONE BALANCED FUND C
(a series of Select Advisors Trust C)
311 Pike Street
Cincinnati, Ohio 45202
PROXY STATEMENT
This Proxy Statement is furnished by Select Advisors Trust A ("Trust A"
or a "Trust") to the shareholders of its Touchstone Balanced Fund A
(respectively, "Fund A Shareholders" and "Fund A"), and by Select Advisors Trust
C ("Trust C" or a "Trust") to the shareholders of its Touchstone Balanced Fund C
(respectively, "Fund C Shareholders" and "Fund C"), on behalf of each Trust's
Board of Trustees. This Proxy Statement is being provided to you in connection
with each Trust's solicitation of the accompanying proxy, to be voted at a
Special Meeting of Shareholders of Fund A and Shareholders of Fund C (the
"Meeting") to be held on April 23, 1997, at 10:00 a.m., Eastern Daylight Time,
at the offices of the Trusts, 311 Pike Street, Cincinnati, Ohio 45202, for the
purposes set forth below and in the accompanying Notice of Special Meeting. This
Proxy Statement is being mailed to Fund A Shareholders and Fund C Shareholders
(collectively, the "Shareholders") on or about April 4, 1997.
At the Meeting, Shareholders will be asked to consider and vote upon
the following:
1. To approve or disapprove: (a) a new portfolio advisory
agreement between Touchstone Advisors, Inc. (the "Advisor") and
OpCap Advisors ("OpCap"), pursuant to which agreement OpCap will
act as portfolio advisor (i.e., subadvisor) with respect to the
assets of the Balanced Portfolio (the "Portfolio") of Select
Advisors Portfolios, as described in this Proxy Statement (all of
the investable assets of Fund A and Fund C are invested in the
Portfolio); and (b) an amendment to the existing investment
advisory agreement between Select Advisors Portfolios (on behalf
of the Portfolio) and the Advisor, pursuant to which agreement
the Advisor acts as investment advisor to the Portfolio, as
described in this Proxy Statement.
2. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
The approval of the new investment advisory agreement with OpCap and the
amendment to the existing investment advisory agreement with the Advisor are
dependent upon each other and are being submitted to the Shareholders as one
proposal.
Fund A is a separate series of Trust A and Fund C is a separate series
of Trust C. Trust A and Trust C are each a Massachusetts business trust. Fund A
and Fund C (each a "Fund" and collectively the "Funds") each seeks to achieve
its investment objective by investing all of its investable assets in the
Portfolio. The Portfolio is a separate series of the Select Advisors Portfolios,
a New York master trust registered as an open-end diversified management
investment company (the "Portfolio Trust"). The Advisor serves as the Portfolio
Trust's investment advisor and each Trust's sponsor. The address of the Advisor
is 311 Pike Street, Cincinnati, Ohio 45202. The Advisor, in its capacity as the
Portfolio Trust's
investment advisor, has engaged a number of portfolio advisors (i.e.,
subadvisors) to manage the separate portfolios of the Portfolio Trust. Harbor
Capital Management Company, Inc. ("Harbor") and Morgan Grenfell Capital
Management, Inc. ("Morgan Grenfell") are the two portfolio advisors currently
engaged to manage investments of the Portfolio. The services provided to the
Portfolio by Harbor and Morgan Grenfell will be terminated upon appointment of a
new portfolio advisor. Touchstone Securities, Inc. serves as each Fund's
principal underwriter and its address is 311 Pike Street, Cincinnati, Ohio
45202. Investors Bank & Trust Company ("Investors Bank") provides
administrative, custodial and fund accounting services for each Trust and the
Portfolio Trust and serves as transfer agent for the Portfolio Trust. The
address of Investors Bank is 89 South Street, Boston, Massachusetts 02111.
Shareholders are being asked to vote on the proposal described in this
Proxy Statement because the Portfolio Trust, on behalf of the Portfolio, has
requested that Portfolio investors (which include only the Funds) vote on such
matters. With respect to the proposal, the entire interest that each Fund holds
in the Portfolio will be voted in direct proportion to the votes cast by
Shareholders of that Fund for and against such proposal at the Meeting. Shares
not voted will, therefore, not affect the outcome at the Portfolio level. As of
the close of business on March 14, 1997, there were 174,898.731 shares of Fund A
outstanding and 172,020.646 shares of Fund C outstanding.
The persons named in the accompanying proxy will vote as directed by
the proxy, but in the absence of voting directions in any proxy that is signed
and returned, they intend to vote FOR the proposal and may vote in their
discretion with respect to other matters not now known to either Trust's Board
of Trustees that may be presented at the Meeting.
A Shareholder may revoke the accompanying proxy at any time prior to
its use by filing with the Secretary of the respective Trust a written
revocation or duly executed proxy bearing a later date. The proxy will not be
voted if the Shareholder is present at the Meeting and elects to vote in person.
Attendance at the Meeting alone will not serve to revoke the proxy.
The principal solicitation of proxies will be by mail, but they may be
solicited by telephone, telegraph and personal contact by Trustees, officers and
regular employees of the respective Trust. All costs associated with the
preparation, filing and distribution of this Proxy Statement, the solicitation
and the Meeting will be borne by the Advisor and not by Fund A or Fund C, the
Trusts, the Portfolio or OpCap.
PROPOSAL TO APPROVE NEW PORTFOLIO ADVISORY AGREEMENT AND
AMENDMENT TO EXISTING INVESTMENT ADVISORY AGREEMENT
PORTFOLIO ADVISORY AGREEMENT BETWEEN THE ADVISOR AND OPCAP
BACKGROUND
As discussed in each Trust's Prospectus, each Fund is a Spoke(sm) fund
within a type of two-tier, master/feeder mutual fund structure, referred to as a
Hub and
2
Spoke(R) structure.1 A fund in a Hub and Spoke structure, unlike other mutual
funds which directly acquire and manage their own portfolio of securities, seeks
to achieve its investment objective by investing all of its investable assets in
a related portfolio. As spokes in a Hub and Spoke structure, each of Fund A and
Fund C seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio.
At the Meeting, Shareholders are being asked to approve a new portfolio
advisory agreement for the Portfolio (the "New Portfolio Advisory Agreement")
between the Advisor and OpCap. Except for the fee arrangement (which may result
in an increase in fees paid by each Fund if either one of the conditions
described below is met), and the addition of provisions regarding OpCap's
expected use of an affiliated broker-dealer to execute transactions on behalf of
the Portfolio (the "affiliated brokerage provisions"), the New Portfolio
Advisory Agreement is identical in all substantive respects to the portfolio
advisory agreement dated September 9, 1994, in effect between the Advisor and
Harbor (the "Harbor Agreement"). Except for the fee arrangement (which may
result in an increase in fees paid by each Fund if either one of the conditions
described below is met), the affiliated brokerage provisions and the other
differences noted under "New Portfolio Advisory Agreement" below, the New
Portfolio Advisory Agreement is also identical in all substantive respects to
the portfolio advisory agreement, dated September 9, 1994, in effect between the
Advisor and Morgan Grenfell (the "Morgan Grenfell Agreement"). (The Harbor
Agreement and the Morgan Grenfell Agreement are collectively referred to herein
as the "Existing Portfolio Advisory Agreements".) A copy of the New Portfolio
Advisory Agreement is set forth in Exhibit A to this Proxy Statement.
Under the investment advisory agreement between the Portfolio Trust (on
behalf of the Portfolio) and the Advisor, the Advisor at its expense may select,
subject to the review and approval of the Portfolio Trust's Board of Trustees, a
portfolio advisor or portfolio advisors to manage the investments of the
Portfolio. The Portfolio Trust's Board of Trustees has selected OpCap as
portfolio advisor to the Portfolio and has approved the New Portfolio Advisory
Agreement, subject to approval by the investors in the Portfolio, to become
effective on May 1, 1997. For information regarding OpCap that the Board of
Trustees considered in making this selection, see "Information about OpCap."
Approval of the New Portfolio Advisory Agreement would not result in
any increase in advisory fees paid by either Fund because the Advisor will pay
OpCap's portfolio advisory fee. However, approval of the amendment to the
existing investment advisory agreement would result in an increase in the fees
payable by the Portfolio Trust on behalf of the Portfolio (of which the Funds
are the sole shareholders) to the Advisor, in part to offset any increased
advisory fees being paid by the Advisor to OpCap. Thus, approval of the proposal
could result in an increase in fees paid by each Fund if (1) an "expense cap" on
each Fund's expenses (described below and currently in effect through March 31,
1998) is removed or (2) if the Fund's aggregate operating expenses are less than
the expense cap for a given fiscal year.
- --------
1
Hub and Spoke(R) is a registered service mark of Signature Financial
Group, Inc. ("Signature"). The terms "Hub(sm)" and "Spoke(sm)" are
service marks of Signature.
3
The affiliated brokerage provisions in the New Portfolio Advisory
Agreement permit OpCap to place brokerage transactions with Oppenheimer Co.,
Inc. ("Opco"), an affiliate of OpCap. However, the New Portfolio Advisory
Agreement provides that OpCap may effect securities transactions for the
Portfolio only if (1) the commissions, fees or other remuneration received or to
be received by it are reasonable and fair compared to the commissions, fees or
other remuneration received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time and (2) the Trustees of
each Trust, including a majority of those Trustees who are not interested
persons of the respective Trust, have adopted procedures pursuant to Rule 17e-1
under the Investment Company Act of 1940 (the "1940 Act") for determining the
permissible level of such commissions. Each Board of Trustees has previously
adopted such procedures. Therefore, OpCap's expected use of Opco to execute
transactions on behalf of the Portfolio should not result in an increase in
brokerage commissions paid by the Portfolio.
EXISTING PORTFOLIO ADVISORY AGREEMENTS
Harbor and Morgan Grenfell each serves as a portfolio advisor for a
portion (65.8% and 34.2%, respectively, as of December 31, 1996) of the assets
of the Portfolio under the Existing Portfolio Advisory Agreements. Harbor
manages the equity portion of the Portfolio while Morgan Grenfell manages the
fixed income portion. The Existing Portfolio Advisory Agreements were approved
by the initial investors in each Fund on September 1, 1994 and were last
approved by each Trust's Trustees, including the Trustees who were not
"interested persons", on December 19, 1996.
Under the Harbor Agreement, Harbor is entitled to receive from the
Advisor a fee for its services equal to the following percentages of the average
daily net assets of the Portfolio managed by Harbor: 0.50% of the first $75
million, 0.40% of the next $75 million, and 0.30% thereafter. Under the Morgan
Grenfell Agreement, Morgan Grenfell is entitled to receive from the Advisor a
fee for its services equal to the following percentages of the average daily net
assets of the Portfolio managed by Morgan Grenfell: 0.35% of the first $40
million and 0.30% thereafter. At December 31, 1996, net assets of the Portfolio
under Harbor's management and Morgan Grenfell's management were $2,650,700 and
$1,379,092, respectively. For the fiscal year ended December 31, 1996, the
Portfolio paid fees of $10,924 and $4,387 to Harbor and Morgan Grenfell,
respectively.
NEW PORTFOLIO ADVISORY AGREEMENT
The New Portfolio Advisory Agreement was approved (subject to approval
by the Shareholders) by each Trust's Trustees, including the Trustees who were
not "interested persons", on February 14, 1997. The terms of the New Portfolio
Advisory Agreement are substantially identical to the terms of the Harbor
Agreement, except for the fee arrangement and the affiliated brokerage
provisions. The terms of the New Portfolio Advisory Agreement are also
substantially identical to the Morgan Grenfell Agreement, except as follows: (1)
Each agreement has a different fee arrangement. (2) The New Portfolio Advisory
Agreement contains the affiliated brokerage provisions. (3) The Morgan Grenfell
Agreement provides that the Advisor will indemnify Morgan Grenfell under certain
circumstances, while the New Portfolio Advisory Agreement has no indemnification
clause. (4) The New Portfolio Advisory Agreement states that OpCap (the
"Portfolio Advisor") may pay a broker or
4
dealer who provides research services to the Portfolio a commission for
effecting a portfolio transaction higher than the commission another broker or
dealer would have charged if, in addition to the satisfaction of other
conditions, the Portfolio derives or will derive a significant benefit from such
research services (a "significant benefit clause"). The Morgan Grenfell
Agreement does not contain a significant benefit clause. The description of the
New Portfolio Advisory Agreement set forth in this Proxy Statement is qualified
in its entirety by reference to Exhibit A.
Under the New Portfolio Advisory Agreement, the Portfolio Advisor will
manage the investment and reinvestment of both the fixed income and equity
assets of the Portfolio, subject to and in accordance with the investment
objectives, policies and restrictions of the Portfolio and any directions which
the Advisor or the Portfolio Trust's Board of Trustees may give from time to
time with respect to the Portfolio. In this regard, the Portfolio Advisor will
make all determinations with respect to the investment of the Portfolio's assets
and the purchase and sale of portfolio securities. In addition, the Portfolio
Advisor will determine the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's securities
will be exercised. The Portfolio Advisor will render regular reports to the
Portfolio Trust's Board of Trustees, to the Advisor and to any advisor(s) that
the Advisor engages to assist it in evaluating the Portfolio Advisor's
performance and activities.
The New Portfolio Advisory Agreement states that the Portfolio
Advisor's primary objective when placing orders with brokers and dealers will be
to obtain the most favorable price and execution available for the Portfolio. In
placing such orders the Portfolio Advisor may consider a number of factors,
including, without limitation, the overall direct net economic result to the
Portfolio (including commissions, which may not be the lowest available but
ordinarily should not be higher than the generally prevailing competitive
range), the financial strength and stability of the broker, the efficiency with
which the transaction will be effected, the ability to effect the transaction at
all where a large block is involved, and the availability of the broker or
dealer to stand ready to execute possibly difficult transactions in the future.
The Portfolio Advisor is specifically authorized, to the extent authorized by
law, to pay a broker or dealer who provides research services to the Portfolio
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. However, such payment is permissible only if
the Portfolio 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 and that the Portfolio derives or will derive
a reasonably significant benefit from such research services.
The New Portfolio Advisory Agreement will continue in effect until May
1, 1998, and it will continue thereafter provided that such continuance is
specifically approved by the Advisor and the Portfolio Advisor and, in addition,
at least annually by (1) the vote of the holders of a majority of the
outstanding voting securities of the Portfolio or by vote of a majority of the
Portfolio Trust's Board of Trustees and (2) by the vote of a majority of the
Trustees of the Portfolio Trust who are not parties to the New Portfolio
Advisory Agreement or
5
interested persons of either the Advisor or the Portfolio Advisor, cast in
person at a meeting called for the purpose of voting on such approval.
The New Portfolio Advisory Agreement may be terminated at any time,
without payment of any penalty, (1) by the Advisor, by the Portfolio Trust's
Board of Trustees or by a vote of the majority of the outstanding voting
securities of the Portfolio, in any such case upon at least 60 days' prior
written notice to the Portfolio Advisor, and (2) by the Portfolio Advisor upon
at least 60 days' prior written notice to the Advisor and the Portfolio Trust.
The New Portfolio Advisory Agreement terminates automatically in the event of
its assignment.
The New Portfolio Advisory Agreement provides that, absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties under the New Portfolio Advisory Agreement on the part of
the Portfolio Advisor, the Portfolio Advisor will not be subject to liability to
the Advisor, the Portfolio Trust or to any holder of an interest in the
Portfolio for any act or omission in the course of, or connected with, rendering
services under the New Portfolio Advisory Agreement or for any losses that may
be sustained in the purchase, holding or sale of any security.
The Advisor pays the fees earned by the Portfolio Advisor with respect
to its management of the Portfolio's assets. As compensation for its services,
the Portfolio Advisor will be paid a monthly fee equal on an annual basis to
0.60% of the first $20 million of average daily net assets of the Combined
Portfolios (as hereinafter defined), 0.50% of the next $30 million of average
daily net assets of the Combined Portfolios, and 0.40% thereafter. "Combined
Portfolios" means the combined assets of the Portfolio and the Balanced
Portfolio of the Select Advisors Variable Insurance Trust, for which portfolio
the Portfolio Advisor will also act as investment advisor.
INFORMATION ABOUT OPCAP
OpCap is a majority-owned subsidiary of Oppenheimer Capital, a
registered investment adviser with approximately $50.6 billion in assets under
management on January 31, 1997. Oppenheimer Financial Corp. ("Opfin"), a holding
company, is a 1.0% general partner of OpCap. Opfin also holds a one-third
managing general partner interest in Oppenheimer Capital, and Oppenheimer
Capital, L.P., a Delaware limited partnership whose units are traded on the New
York Stock Exchange and of which Opfin is the sole 1.0% general partner, owns
the remaining two-thirds interest.
On February 13, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a
registered investment adviser with approximately $110 billion in assets under
management through various subsidiaries, signed an Agreement and Plan of Merger
with Oppenheimer Group, Inc. ("OGI") and its subsidiary Opfin pursuant to which
PIMCO Advisors and its affiliate, Thomson Advisory Group Inc. ("TAG"), will
acquire the one-third managing general partner interest in Oppenheimer Capital,
its 1.0% general partnership interest in OpCap, and its 1.0% general partner
interest in Oppenheimer Capital L.P. (the "Transaction") and OGI will be merged
with and into TAG. The aggregate purchase price is approximately $265 million in
convertible preferred stock of TAG and assumption of certain indebtedness. The
amount of TAG preferred stock comprising the purchase price is subject to
reduction in certain
6
circumstances. The Transaction is subject to certain conditions being satisfied
prior to closing, including consents from certain lenders, approvals from
regulatory authorities, including a favorable tax ruling from the Internal
Revenue Service, and consents of certain clients, which are expected to take up
to six months to obtain. If the Transaction is consummated, it will involve a
change in control of Oppenheimer Capital and its subsidiary OpCap.
The principal business address of OpCap, Oppenheimer Capital and their
affiliates is Oppenheimer Tower, 200 Liberty Street, One World Financial Center,
New York, New York 10281. The principal business address of OpCap would not
change following the Transaction. Joseph La Motta is Chairman of Oppenheimer
Capital and OpCap. George Long is President of Oppenheimer Capital and Bernard
H. Garil is President of OpCap.
Alan Gutmann will be primarily responsible for the day-to-day
investment management of the equity portion of the Portfolio and Matthew
Greenwald will be primarily responsible for the day-to-day investment management
of the fixed-income portion of the Portfolio. Mr. Gutmann joined Oppenheimer in
1991 and is Vice President. Mr. Greenwald joined Oppenheimer in 1989 and is a
Vice President.
Please refer to Exhibit B to this Proxy Statement, which identifies all
investment companies which have investment objectives similar to those of the
Portfolio and the Funds and for which OpCap acts as investment sub-advisor or
advisor. Exhibit B also provides the fees charged such investment companies by
OpCap, and the size of each such investment company.
EFFECTS OF THE TRANSACTION
Upon consummation of the Transaction, Oppenheimer Capital and OpCap
will be controlled by PIMCO Advisors. PIMCO Advisors has advised OGI that it
anticipates that the senior portfolio management team of Oppenheimer Capital
will continue in their present capacities; that the eligibility of OpCap to
serve as an investment adviser or subadviser will not be affected by the
Transaction; and that Oppenheimer Capital and OpCap will be able to continue to
provide advisory and management services with no material changes in operating
conditions. PIMCO Advisors has further advised OGI that it currently anticipates
that the Transaction will not affect the ability of Oppenheimer Capital and
OpCap to fulfill their obligations under their investment advisory or
subadvisory agreements.
EFFECTS OF TRANSACTION ON NEW PORTFOLIO ADVISORY AGREEMENT
As required by the 1940 Act, the New Portfolio Advisory Agreement
provides for its automatic termination upon its "assignment." The 1940 Act
defines "assignment" to include any direct or indirect transfer of a controlling
block of the assignor's outstanding voting securities by a security holder of
the assignor. If the Transaction is consummated, it will give rise to an
"assignment" of the New Portfolio Advisory Agreeement and thus its termination.
If the Transaction is consummated and the New Portfolio Advisory
Agreement is terminated as a result, the Advisor and OpCap intend to enter into
an amendment (the "Transaction Amendment") to the New Portfolio Advisory
Agreement. The Transaction Amendment will not change any of the terms of the New
Portfolio Advisory Agreement, except for the effective and termination dates.
The Transaction Amendment will be submitted for approval to each
Trust's Board of Trustees, including the Trustees who are not "interested
persons." The Transaction Amendment must also be approved by the vote of a
"majority of the outstanding voting securities" (as defined under "Required Vote
and Trustees' Recommendation" below) of each Fund. To avoid the expense of
another proxy solicitation and meeting of each Fund's Shareholders, the vote of
the Shareholders of each Fund on the New Portfolio Advisory Agreement will be
deemed to be a vote on the Transaction Amendment. Thus, upon consummation of the
Transaction and approval of the Transaction Amendment by each Trust's Board of
Trustees, the Transaction Amendment will become effective without any additional
vote of the Shareholders.
7
INFORMATION CONCERNING PIMCO ADVISORS
PIMCO Advisors, with approximately $110 billion in assets under
management as of December 31, 1996, is one of the largest publicly traded money
management firms in the United States. PIMCO Advisors' address is 800 Newport
Center Drive, Suite 100, Newport Beach, California 92660.
PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively (and will at the closing of the Transaction own a majority of the
voting stock of TAG which owns approximately 14.94% and 25.06%, respectively),
of the total outstanding Class A and Class B units of limited partnership
interest ("Units") of PIMCO Advisors and is PIMCO Advisors' sole general
partner. PIMCO GP is a California general partnership with two general partners.
The first of these is an indirect wholly-owned subsidiary of Pacific Mutual Life
Insurance Company ("Pacific Mutual").
PIMCO Partners L.L.C. ("PPLLC"), a California limited liability
company, is the second, and managing, general partner of PIMCO GP. PPLLC's
members are the Managing Directors (the "PIMCO Managers") of Pacific Investment
Management Company, a subsidiary of PIMCO Advisors (the "PIMCO Subpartnership").
The PIMCO Managers are: William H. Gross, Dean S. Meiling, James F. Muzzy,
William F. Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague,
William S. Thompson Jr., William C. Powers, David H. Edington, Benjamin Trosky,
William R. Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Governance matters are allocated generally to the Operating Board and the
Operating Board delegates to the Operating Committee the authority to manage
day-to-day operations of PIMCO Advisors. The Operating Board is composed of
twelve members, including the chief executive officer of the PIMCO
Subpartnership as Chairman and six PIMCO Managers designated by the PIMCO
Subpartnership.
The authority of PIMCO Advisors' Operating Board and Operating
Committee to take certain specified actions is subject to the approval of PIMCO
Advisors' Equity Board. Equity Board approval is required for certain major
transactions (e.g., issuance of additional PIMCO Advisors' Units and appointment
of PIMCO Advisors' chief executive officer). In addition, the Equity Board has
jurisdiction over matters such as actions which would have a material effect
upon PIMCO Advisors' business taken as a whole and (after an appeal from an
Operating Board decision) matters likely to have a material adverse economic
effect on any subpartnership of PIMCO Advisors. The Equity Board is composed of
twelve members, including the chief executive officer of PIMCO Advisors, three
members designated by a subsidiary of Pacific Mutual, the chairman of the
Operating Board and two members designated by PPLLC.
Because of its power to appoint (directly or indirectly) seven of the
twelve members of the Operating Board as described above, the PIMCO
Subpartnership may be deemed to control PIMCO Advisors. Because of the direct or
indirect power to appoint 25% of the members of the Equity Board, (i) Pacific
Mutual and (ii) the PIMCO Managers and/or the PIMCO Subpartnership may each be
deemed, under applicable provisions of the 1940 Act, to control PIMCO Advisors.
Pacific Mutual, PIMCO Subpartnership and the PIMCO Managers disclaim such
control.
8
PIMCO Advisors, OpCap, OGI and Oppenheimer Capital have agreed to
comply and use all commercially reasonable efforts to cause compliance with the
provisions of Section 15(f) of the 1940 Act. Section 15(f) provides, in
pertinent part, that an investment adviser and its affiliates may receive any
amount or benefit in connection with a sale of an interest in such investment
adviser which results in an assignment of an investment advisory contract if (1)
for a period of three years after the time of such event, 75% of the members of
the Board of Trustees or Directors of the investment company which it advises
are not "interested persons" (as defined in the 1940 Act) of the new or old
investment adviser, and (2) during the two-year period after the date on which
the transaction occurs, there is no "unfair burden" imposed on the investment
company as a result of the transaction. For this purpose, "unfair burden" is
defined to include any arrangement during the two-year period after the
transaction whereby the investment adviser or predecessor or successor
investment advisers, or any interested person of any such adviser, receives or
is entitled to receive any compensation directly or indirectly (i) from any
person in connection with the purchase or sale of securities or other property
to, from, or on behalf of the investment company other than bona fide ordinary
compensation as principal underwriter for such company, or (ii) from the
investment company or its security holders for other than bona fide investment
advisory or other services. No compensation arrangements of the types described
above are contemplated in the Transaction. Neither Trust's Board of Trustees
presently includes any "interested persons" of OpCap or PIMCO Advisors. It is
anticipated that each Trust will comply with or be exempt from the 75%
requirement for the three-year period after the consummation of the Transaction.
In connection therewith, an application requesting exemption from the 75%
requirement will be filed with the Securities and Exchange Commission. There can
be no assurance that such exemption will be granted.
9
TRUSTEES' CONSIDERATION
The Board of Trustees of each Trust believes that the terms of the New
Portfolio Advisory Agreement are fair to, and in the best interest of, the
Portfolio, the Portfolio Trust, Trust A and Trust C and the Shareholders of Fund
A and Fund C. Each Trust's Board of Trustees, including the non-interested
Trustees of each Trust voting separately, recommends approval by the
Shareholders of the New Portfolio Advisory Agreement between OpCap and the
Advisor. In making this recommendation, the Trustees considered the efficiency
of having only one portfolio advisor manage both the equity and fixed income
components of the Portfolio, rather than the existing two. The Trustees then
reviewed the nature and quality of the proposed services to be provided by OpCap
to the Portfolio, OpCap's past performance record with respect to balanced
accounts, the scope of OpCap's portfolio management activities, OpCap's
investment philosophy and process, and the quality of OpCap's capabilities
generally. The Trustees also examined the background and experience of the
various officers and managers of Oppenheimer Capital, especially those who would
have direct involvement in the Portfolio's management. Fees charged by entities
providing services comparable to those of OpCap were also considered.
After a comprehensive review of the matter, the Board of Trustees of
each Trust concluded that the Portfolio should receive investment advisory
services under the New Portfolio Advisory Agreement equal or superior to those
it currently receives under the Existing Portfolio Advisory Agreements.
AMENDMENT TO EXISTING INVESTMENT ADVISORY AGREEMENT
BACKGROUND
At the Meeting, Shareholders are being asked to approve an amendment
(the "Amendment") to the investment advisory agreement (the "Investment Advisory
Agreement"), dated September 9, 1994, between the Portfolio Trust, on behalf of
the Portfolio, and the Advisor. The Amendment makes no change to the Investment
Advisory Agreement except to increase the fee paid to the Advisor by the
Portfolio Trust, on behalf of the Portfolio. Since Fund A and Fund C are the
sole shareholders of the Portfolio, the Funds and ultimately Shareholders of the
Funds would bear the expense of the increased fee. However, a "cap" has been
placed on each Fund's expenses by the Advisor (currently effective through March
31, 1998). Unless the expense cap is removed or unless a Fund's aggregate
operating expenses are less than the expense cap for a given fiscal year, the
impact of the proposed increase in advisory fees is eliminated with respect to a
Fund's shareholders. (See
10
footnote 1 set forth in "The Amendment" below for further information regarding
the expense cap.) A copy of the Investment Advisory Agreement and the Amendment
is set forth in Exhibit C to this Proxy Statement.
THE INVESTMENT ADVISORY AGREEMENT
The Investment Advisory Agreement was approved by the initial investors
in each Fund on September 1, 1994, and was last approved by each Trust's Board
of Trustees, including the Trustees who were not "interested persons", on
December 19, 1996. Under the Investment Advisory Agreement, the Advisor manages
the investment and reinvestment of the Portfolio's assets. In fulfilling this
obligation, the Advisor may engage separate portfolio advisors, such as OpCap,
to make all determinations with respect to the investment of the Portfolio's
assets, and to effect the purchase and sale of portfolio securities. The
Investment Advisory Agreement provides that services by a portfolio advisor will
also include determining the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the portfolio securities
will be exercised. Under the Investment Advisory Agreement, the Advisor causes
each portfolio advisor to render regular reports to the Portfolio Trust's Board
of Trustees.
The Investment Advisory Agreement continues in effect until December
31, 1997, and it will continue thereafter provided that such continuance is
specifically approved by the Portfolio Trust and the Advisor and, in addition,
at least annually by (1) the vote of holders of a majority of the outstanding
voting securities of the Portfolio or by vote of a majority of the Portfolio
Trust's Board of Trustees, and (2) by the vote of a majority of the Trustees of
the Portfolio Trust who are not parties to the Investment Advisory Agreement or
interested persons of the Advisor, cast in person at a meeting called for the
purpose of voting on such approval.
The Investment Advisory Agreement may be terminated at any time, with
respect to the Portfolio, without payment of any penalty, (1) by the Portfolio
Trust's Board of Trustees or by a vote of the majority of the outstanding voting
securities of the Portfolio upon 60 days' prior written notice to the Advisor
and (2) by the Advisor upon 60 days' prior written notice to the Portfolio
Trust.
The Investment Advisory Agreement provides that, absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties under the Investment Advisory Agreement on the part of the Advisor,
the Advisor will not be subject to liability to the Portfolio Trust or to any
holder of an interest in the Portfolio for any act or omission in the course of,
or connected with, rendering services under the Investment Advisory Agreement or
for any losses that may be sustained in the purchase, holding or sale of any
security. Under certain circumstances, the Portfolio Trust will indemnify the
Advisor against losses, claims, damages, liabilities or expenses resulting from
acts or omissions of the Portfolio Trust.
The Investment Advisory Agreement states that the Portfolio Trust pays
to the Advisor, as compensation for its services as investment advisor, a fee
that is equal on an annual basis to 0.70% of the average daily net assets of the
Portfolio.
11
THE AMENDMENT
The Amendment was approved by each Trust's Board of Trustees, including
the Trustees who were not "interested persons," on February 14, 1997. The
Amendment proposes only to increase the fee paid by the Portfolio Trust, on
behalf of the Portfolio, to the Advisor. If adopted, the Amendment would
increase the fee on an annual basis from 0.70% of average daily net assets of
the Portfolio to 0.80% of average daily net assets of the Portfolio. The
Amendment would not change the Investment Advisory Agreement in any other
respect.
--------------------------
For the fiscal year ended December 31, 1996, the following table
provides (1) the aggregate operating expenses of Fund A and the Portfolio, and
(2) the aggregate operating expenses of Fund C and the Portfolio, each expressed
as a percentage of average daily net assets of the relevant Fund. The table
considers both the current advisory fee paid to the Advisor and the proposed
increased advisory fee.
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
FUND A FUND C
------ ------
CURRENT FEES PROPOSED FEES CURRENT FEES PROPOSED FEES
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Advisors Fee 0.70% 0.80% 0.70% 0.80%
Rule 12b-1 Fees 0.25% 0.25% 1.00% 1.00%
Other Expenses(1)
(after waiver and
reimbursement) 0.40% 0.30% 0.40% 0.30%
----- ----- ----- -----
Total Operating Expenses(1)
(after waiver and
reimbursement) 1.35% 1.35% 2.10% 2.10%
===== ===== ===== =====
</TABLE>
- -----------
(1) The "Total Operating Expenses" charged to each Fund and the Portfolio will
not exceed the percentages listed above. The Advisor, in its capacity as sponsor
of each Trust, has agreed to waive or reimburse certain of the Operating
Expenses of each Fund and the Portfolio (as used herein, "Operating Expenses"
includes amortization of organizational expenses but is exclusive of interest,
taxes, brokerage commissions and other portfolio transaction expenses, capital
expenditures and extraordinary expenses) such that, after such waivers or
reimbursements, the aggregate Operating Expenses of each Fund and the Portfolio
will not exceed on an annual basis the "Total Operating Expenses" listed above
(the "Expense Caps"). An Expense Cap may be terminated with respect to a Fund by
the Advisor, in its capacity as sponsor, as of the end of any calendar quarter
after December 31, 1997, by giving at least 30 days prior written notice, and
the sponsor agreement will terminate with respect to a Trust if the Advisor (or
an affiliate that has assumed such obligations) ceases to be the sponsor of such
Trust or the Advisor of the Portfolio Trust. For the year ended December 31,
1996, without the Expense Caps and assuming current fees, "Other Expenses" and
"Total Operating Expenses" would have been (i) 5.71% and 6.66% for Fund A and
the Portfolio, and
12
(ii) 6.09% and 7.79% for Fund C and the Portfolio. For the year ended December
31, 1996, without the Expense Caps and assuming proposed fees, "Other Expenses"
and "Total Operating Expenses" would have been (i)5.71% and 6.76% for Fund A and
the Portfolio, and (ii) 6.09% and 7.89% for Fund C and the Portfolio.
--------------------------
Based on expenses incurred for the year ended December 31, 1996, an
investor would pay the expenses set forth in the table below on a $1,000
investment, assuming (1) a 5% annual return, (2) the total operating expense
ratio set forth in the immediately preceding chart, and (3) redemption at the
end of each time period. The table considers both the current advisory fee paid
to the Advisor and the proposed increased advisory fee.
<TABLE>
<CAPTION>
FUND A FUND C
------ ------
CURRENT FEES PROPOSED FEES CURRENT FEES PROPOSED FEES
------------ ------------- ------------ -------------
<C> <C> <C> <C> <C>
1 Year $70 $70 $31 $31
3 Years $98 $98 $66 $66
5 Years $127 $127 $113 $113
10 Years $211 $211 $243 $243
</TABLE>
INFORMATION ABOUT THE ADVISOR
The Advisor is a wholly-owned subsidiary of IFS Financial Services,
Inc., which is a wholly-owned subsidiary of Western-Southern Life Assurance
Company, located at 400 Broadway, Cincinnati, Ohio 45202. Western-Southern Life
Assurance Company is a wholly-owned subsidiary of The Western and Southern Life
Insurance Company. As of December 31, 1996, the Advisor had assets under
management of $169.3 million. For the fiscal year ended December 31, 1996, the
Advisor received $24,065 from the Portfolio Trust (on behalf of the Portfolio)
for its services as investment advisor. Had the Amendment been in effect for
that period, the Advisor would have received $27,503 from the Portfolio Trust
(on behalf of the Portfolio) for its services as investment advisor (an increase
of 14.3% over the amount actually received).
For the fiscal year ended December 31, 1996, the Advisor waived all
fees for its services as sponsor to each Trust. If such fees had not been
waived, Trust A, on behalf of Fund A, and Trust C, on behalf of Fund C, would
have paid the Advisor, for its role as sponsor, $14,657 and $11,408
respectively. Whether or not the Amendment is approved by Shareholders, the
Advisor will continue as Sponsor to each Trust.
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF THE ADVISOR
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
---------------------
NAME AND ADDRESS* WITH TOUCHSTONE ADVISORS PRINCIPAL OCCUPATION
----------------- ------------------------ --------------------
<S> <C> <C>
James N. Clark* Director Executive Vice President,
The Western and Southern
Life Insurance Company
Edward G. Harness, Jr. Director, President and
Chief Executive Officer same
13
William F. Ledwin* Director Senior Vice President,
The Western and Southern
Life Insurance Company
Donald J. Wuebbling* Director, Secretary
and Chief Legal Officer same
Edward S. Heenan* Vice President and Controller same
Brian Manley Vice President and Chief
Financial Officer same
Richard K. Taulbee* Vice President same
Patricia Wilson Chief Compliance Officer same
Robert F. Morand* Assistant Secretary Attorney,
The Western and Southern
Life Insurance Company
Robert A. Dressman* Assistant Treasurer Attorney,
The Western and Southern
Life Insurance Company
Timothy D. Speed* Assistant Treasurer Assistant Vice President,
The Western and Southern
Life Insurance Company
</TABLE>
- ------------------
*Principal business address is 400 Broadway, Cincinnati, Ohio 45202
TRUSTEES' CONSIDERATION
The Board of Trustees of each Trust believes that the terms of the
Amendment are fair to, and in the best interest of, the Portfolio, the Portfolio
Trust, Trust A and Trust C and the Shareholders of Fund A and Fund C. Each
Trust's Board of Trustees, including the non-interested Trustees of each Trust
voting separately, recommends approval by the Shareholders of the Amendment. In
making this recommendation, the Trustees considered the nature and quality of
the services that the Advisor has provided to the Portfolio, the fees charged by
investment advisors providing services comparable to those of the Advisor and
the fees that would be charged to the Advisor by OpCap, if it is selected as a
portfolio advisor. After consideration of the matter, the Board of Trustees of
each Trust concluded that the fee increase proposed in the Amendment was
appropriate.
REQUIRED VOTE AND TRUSTEES RECOMMENDATION
At the Meeting, the Shareholders of each Fund will vote on the proposal
including the proposed New Portfolio Advisory Agreement and the proposed
Amendment. Trust A and Trust C will then vote the securities of the Portfolio
held by Fund A and Fund C, respectively, in accordance with that Fund's
Shareholder vote at the Meeting. Each Trust will cast all of the respective
Fund's votes on the Amendment in the same proportion as the votes of that Fund's
Shareholders cast at the Meeting on this matter. The percentage of a Fund's
interest in the Portfolio that represents such Fund's Shareholders not voting at
the Meeting will be voted for or against the Amendment in the same proportion as
those cast by such Fund's Shareholders who do vote.
The affirmative vote of the holders of a "majority of the outstanding
voting securities" of the Portfolio, which are held in part by Fund A and the
remainder
14
by Fund C, is required to approve the proposal. "Majority of the outstanding
voting securities" of the Portfolio for this purpose under the 1940 Act means
the lesser of (1) 67% of the securities of the Portfolio present, if more than
50% of the outstanding securities of the Portfolio are represented and voting,
or (2) more than 50% of such outstanding securities.
If a Shareholder abstains, the shares represented will be counted as
present and entitled to vote on the matter for purposes of determining a quorum
at the Meeting, but the abstention will have the effect of a negative vote on
the proposal. If a broker indicates on the form of proxy that it does not have
discretionary authority as to certain shares, those shares will be counted as
present at the meeting for quorum purposes but not entitled to vote with respect
to the proposal and thus will also have the effect of a negative vote on the
proposal.
Each Shareholder vote for or against the proposal is effectively a vote
for or against three separate but interdependent matters: (1) the proposed New
Portfolio Advisory Agreement with OpCap, (2) the Transaction Amendment to be
effective upon consummation of the transaction involving OpCap and PIMCO
Advisors, and (3) the proposed Amendment to the Investment Advisory Agreement
with the Advisor. These matters are being presented to the Shareholders as one
proposal because they are interdependent, such that the failure of any one part
of the proposal would render the other two parts moot. Accordingly, if a
Shareholder disagrees with any part of the proposal, the Shareholder should vote
against the proposal. Western-Southern Life Assurance Company owns more than 50%
of the outstanding voting securities of each Fund and has indicated that it
intends to vote for the proposal.
EACH TRUST'S BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE
PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of February 4, 1997, the following persons were beneficial owners of
more than 5% of the outstanding shares of Fund A:
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
------------------------------------ -------------------- ----------------
<S> <C> <C>
Western-Southern Life 113,849 68.67%
Assurance Company
400 Broadway
Cincinnati, Ohio 45202
As of February 4, 1997, the following persons were beneficial owners of
more than 5% of the outstanding shares of Fund C:
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
------------------------------------ -------------------- ----------------
Western-Southern Life 112,238 70.16%
Assurance Company
400 Broadway
Cincinnati, Ohio 45202
J. Philip Carter, Trustee 8,479 5.30%
Holiday, Florida 34690
</TABLE>
15
To the knowledge of the Trusts, no other Shareholder beneficially owned
more than 5% of the outstanding shares of Fund A or Fund C as of February 4,
1997.
As of February 4, 1997, the Trustees and officers of Trust A and Trust
C as a group beneficially owned less than 1% of the outstanding shares of Fund A
and Fund C, respectively.
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
The Trusts' management does not know of any matters to be presented at
the Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the proxy holders will vote
thereon in accordance with their best judgment.
PORTFOLIO TRANSACTIONS
The Portfolio does not allocate its portfolio brokerage on the basis of
the sale of its shares, although brokerage firms whose customers purchase shares
of either Fund may participate in brokerage commissions. Brokerage transactions
are not placed with any person affiliated with the Trusts, the Portfolio Trust
or the Advisor. OpCap will place brokerage transactions with Opco, an affiliate
of OpCap. Opco may be a major recipient of brokerage commissions paid by the
Portfolio.
SHAREHOLDER PROPOSALS
The Meeting is a special meeting of Shareholders. Neither the Trusts
nor the Portfolio Trust is required to, nor do any of them intend to, hold
regular annual meetings of its shareholders or interest holders. If such a
meeting is called, any shareholder who wishes to submit a proposal for
consideration at the meeting should submit the proposal promptly to the
respective Trust or the Portfolio Trust, as the case may be.
REPORTS TO SHAREHOLDERS
Each Trust will furnish, without charge, a copy of the most recent
Annual Report to Shareholders of the respective Fund on request within three
business days of the request. Requests for such reports should be made by
telephone by calling (800) 669-2796 (press 3) or in writing to the respective
Trust, 311 Pike Street, Cincinnati, Ohio 45202.
OPCAP AND PIMCO ADVISORS INFORMATION
All information contained in this Proxy Statement about OpCap and the
Transaction has been provided by OpCap, and all information contained in this
Proxy Statement about PIMCO Advisors has been provided by PIMCO Advisors.
16
IN ORDER THAT THE PRESENCE OF A QUORUM AT THE MEETING MAY BE ASSURED, PROMPT
EXECUTION AND RETURN OF THE ENCLOSED PROXY IS REQUESTED. A SELF-ADDRESSED,
POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Trustees of each Trust
Susan C. Mosher
Secretary
April 4, 1997
Cincinnati, Ohio
17
EXHIBIT A
PORTFOLIO ADVISORY AGREEMENT
SELECT ADVISORS PORTFOLIOS
BALANCED PORTFOLIO
This PORTFOLIO ADVISORY AGREEMENT is made as of the ____ day of
________, 1997, by and between TOUCHSTONE ADVISORS, INC., an Ohio corporation
(the "Advisor"), and OpCap Advisors (the "Portfolio Advisor"), a subsidiary of
Oppenheimer Capital, a Delaware general partnership.
WHEREAS, the Advisor has been organized to operate as an investment
advisor registered under the Investment Advisers Act of 1940, as amended, and
has been retained by Select Advisors Portfolios (the "Trust"), a New York trust
organized pursuant to a Declaration of Trust dated February 7, 1994 and
registered as an open-end management investment company under the Investment
Company Act of 1940 (the "1940 Act") to provide investment advisory services to
the Balanced Portfolio (herein the "Portfolio"); and
WHEREAS, the Portfolio Advisor also is an investment advisor registered
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Portfolio Advisor to furnish
it with portfolio management services in connection with the Advisor's
investment advisory activities on behalf of the Portfolio, and the Portfolio
Advisor is willing to furnish such services to the Advisor and the Portfolio;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE PORTFOLIO 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
Portfolio Advisor to manage the investment and reinvestment of those assets of
the Portfolio allocated to it by the Advisor (the "Portfolio 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio.
2. DUTIES OF THE PORTFOLIO ADVISOR. The Portfolio Advisor will provide
the following services and undertake the following duties:
a. The Portfolio Advisor will manage the investment and
reinvestment of the assets of the Portfolio Assets, subject to and in
accordance with the investment objectives, policies and restrictions of
the Portfolio and any directions which the Advisor or the Trust's Board
of Trustees may give from time to time with respect to the Portfolio.
In furtherance of the foregoing, the Portfolio Advisor will make all
determinations with respect to the investment of the assets of the
Portfolio and the purchase and sale of portfolio securities and shall
take such steps as may be necessary or advisable to implement the same.
The Portfolio 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 Portfolio
Advisor will render regular reports to the Trust's Board of Trustees,
to the Advisor and to RogersCasey Consulting, Inc. (or such other
advisor or advisors as the Advisor shall engage to assist it in the
evaluation of the performance and activities of the Portfolio Advisor).
Such reports shall be made in such form and manner and with respect to
such matters regarding the Portfolio and the Portfolio Advisor as the
Trust, the Advisor or RogersCasey Consulting, Inc. shall from time to
time request.
b. The Portfolio Advisor shall provide support to the Advisor
with respect to the marketing of the Portfolio, including but not
limited to: (i) permission to use the Portfolio Advisor's name as
provided in Section 5, (ii) permission to use the past performance and
investment history of the Portfolio Advisor as the same is applicable
to the Portfolio, and (iii) access to the individual(s) responsible for
day-to-day management of the Portfolio for marketing conferences,
teleconferences and other activities involving the promotion of the
Portfolio, subject to the reasonable request of the Advisor, (iv)
permission to use biographical and historical data of the Portfolio
Advisor and individual manager(s), and (v) permission to use the names
of clients to which the Portfolio Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
c. The Portfolio Advisor will, in the name of the Portfolio,
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
- 2 -
the execution of portfolio transactions, the Portfolio Advisor will
create and maintain all necessary brokerage records of the Portfolio 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 Portfolio Advisor's
primary objective shall be to obtain the most favorable price and
execution available for the Portfolio, and in placing such orders the
Portfolio Advisor may consider a number of factors, including, without
limitation, the overall direct net economic result to the Portfolio
(including commissions, which may not be the lowest available but
ordinarily should not be higher than the generally prevailing
competitive range), the financial strength and stability of the broker,
the efficiency with which the transaction will be effected, the ability
to effect the transaction at all where a large block is involved and
the availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. The Portfolio 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 Portfolio 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 Portfolio
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 Portfolio Advisor's overall
responsibilities with respect to discretionary accounts that it
manages, and that the Portfolio derives or will derive a reasonably
significant benefit from such research services. The Portfolio 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. The Advisor recognizes that, subject to the foregoing
provisions of this Section 2, Oppenheimer Co. Inc. ("Opco"), an
affiliate of the Portfolio Advisor, will act as the regular broker for
the portfolio so long as it is lawful for it so to act and that Opco
may be a major recipient of brokerage commissions paid by the
portfolio. Opco may effect securities transactions for the portfolio
only if (1) the commissions, fees or other remuneration received or
- 3 -
to be received by it are reasonable and fair compared to the
commissions, fees or other remuneration received by other brokers in
connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable
period of time and (2) the Trustees, including a majority of those
Trustees who are not interested persons, have adopted procedures
pursuant to Rule 17e-1 under the 1940 Act for determining the
permissible level of such commissions.
e. The Advisor understands that (i) when orders to purchase or
sell the same security on identical terms are placed by more than one
of the funds and/or other advisory accounts managed by the Portfolio
Advisor or its affiliates, the transactions generally will be executed
as received, although a fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its order
executed first, (ii) although all orders placed on behalf of the
Portfolio will be considered free trades, having an order placed first
in the market does not necessarily guarantee the most favorable price,
and (iii) purchases will be combined where possible for the purpose of
negotiating brokerage commissions, which in some cases might have a
detrimental effect on the price or volume of the security in a
particular transaction as far as the Portfolio is concerned.
f. In the event of any reorganization or other change in the
Portfolio Advisor, its investment principals, supervisors or members of
its investment (or comparable) committee, the Portfolio 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.
g. The Portfolio Advisor will bear its expenses of providing
services to the Portfolio pursuant to this Agreement except such
expenses as are undertaken by the Advisor or the Trust.
h. The Portfolio Advisor will manage the Portfolio 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 PORTFOLIO ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Portfolio Advisor, the Advisor will pay to
the
- 4 -
Portfolio Advisor a monthly fee equal on an annual basis to 0.60% of
the first $20 million of the average daily net assets of the Combined
Portfolios, 0.50% of such average daily net assets in excess of $20
million and up to $50 million and 0.40% of such average daily net
assets in excess of $50 million.
b. "Combined Portfolios," for purposes of this Section 3,
means the combined assets of the Portfolio and the Balanced Portfolio
of the Select Advisors Variable Trust, to which portfolio the Portfolio
Advisor also acts as investment advisor.
c. The fee of the Portfolio Advisor hereunder shall be
computed and accrued daily. If the Portfolio Advisor serves in such
capacity for less than the whole of any period specified in Section 3a,
the fee to the Portfolio Advisor shall be prorated. For purposes of
calculating the Portfolio Advisor's fee, the daily value of the net
assets of the Combined Portfolios shall be computed by the same method
as the Trust and the Select Advisors Variable Insurance Trust use,
respectively, to compute the net asset value of each such Portfolio for
purposes of purchases and redemptions of interests thereof.
d. The Portfolio Advisor reserves the right to waive all or a
part of its fees hereunder.
4. ACTIVITIES OF THE PORTFOLIO ADVISOR. It is understood that the
Portfolio Advisor may perform investment advisory services for various other
clients, including other investment companies. The Portfolio 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 Portfolio Advisor, (ii) the nature and
amount of transactions affecting the Portfolio that involve the Portfolio
Advisor and affiliates of the Portfolio Advisor, (iii) information regarding any
potential conflicts of interest arising by reason of its continuing provision of
advisory services to the Portfolio and to its other accounts, and (iv) such
other information as the Board of Trustees shall reasonably request regarding
the Portfolio, the Portfolio's performance, the services provided by the
Portfolio Advisor to the Portfolio as compared to its other accounts and the
plans of, and the capability of, the Portfolio Advisor with respect to providing
future services to the Portfolio and its other accounts. At least annually, the
Portfolio 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 Portfolio Advisor
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of business among the Portfolio and its other clients.
It is understood that the Portfolio Advisor may become interested in
the Trust as an interest holder or otherwise.
- 5 -
The Portfolio Advisor has supplied to the Advisor and the Trust copies
of its Form ADV with all exhibits and attachments thereto (including the
Portfolio Advisor's statement of financial condition) and will hereafter supply
to the Advisor, promptly upon the preparation thereof, copies of all amendments
or restatements of such document.
Nothing in this Agreement shall prevent the Portfolio Advisor, any
parent, subsidiary or affiliate, or any director or officer thereof, from acting
as investment advisor for any other person, firm, or corporation, and shall not
in any way limit or restrict the Portfolio Advisor or any of its directors,
officers, stockholders or employees from buying, selling or trading any
securities or commodities for its or their own account or for the account of
others for whom it or they may be acting, if such activities will not adversely
affect or otherwise impair the performance by the Portfolio Advisor of its
duties and obligations under this Agreement. The Portfolio Advisor will (i)
supply to the Advisor, upon the execution of this Agreement, with a true copy of
its currently effective Code of Ethics and policies regarding insider trading
and (ii) thereafter supply to Advisor copies of any amendments to or
restatements of such Code of Ethics or insider trading policies, and (iii)
report to the Board of Trustees not less often than quarterly with respect to
any violations of such Code of Ethics or insider trading policies by persons
covered thereby to the extent that such violations involve the assets or
activities of the Portfolio.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name
of the Portfolio 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 Portfolio Advisor; provided, however, that the Portfolio 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 Portfolio Advisor shall not use the name of the
Advisor or the Trust in any material relating to the Portfolio 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 Portfolio 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 PORTFOLIO ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Portfolio Advisor, the Portfolio Advisor
shall not be subject to liability to the Advisor, the Trust or to any holder of
an interest in the
- 6 -
Portfolio 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 "Portfolio
Advisor" shall include the Portfolio Advisor and/or any of its affiliates and
the directors, officers and employees of the Portfolio Advisor and/or any of its
affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Portfolio 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 Portfolio Advisor agrees
that (i) the Trust's obligations to the Portfolio Advisor under this Agreement
(or indirectly under the Advisory Agreement) shall be limited, in any event to
the assets of the Portfolio and (ii) the Portfolio Advisor shall not seek
satisfaction of any such obligation from the holders of interests in the
Portfolio nor from any Trustee, officer, employee or agent of the Trust.
8. FORCE MAJEURE. The Portfolio 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 Portfolio 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 12 months 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 Portfolio 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 Portfolio
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 Portfolio, in any such case upon not less than 60
days' prior written notice to the Portfolio Advisor and (ii) by the
Portfolio 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.
- 7 -
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 Portfolio 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 Portfolio Advisor shall be 225 Liberty Street, 16th Floor, New
York, New York 10281.
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 _____________________________
Edward G. Harness, Jr.
President
Attest:
- -------------------------
- 8 -
Secretary
OPPENHEIMER CAPITAL _____________
BY _____________________________
Name, President
Attest:
- -------------------------
Secretary
0383878.02
- 9 -
EXHIBIT B
The registered investment companies listed below are managed by OpCap
Advisors and have similar investment objectives to the Portfolio and the Funds:
<TABLE>
<CAPTION>
FUND APPROXIMATE NET ASSETS ADVISORY FEE RATE
- ---- ---------------------- -----------------
(AS OF 3/17/97)
---------------
<S> <C> <C>
Oppenheimer Quest $2,632,362,436 1.0% on the first $400 million;
Opportunity Value Fund1 .90% on the next $400 million;
.85% of net assets in excess of
$800 million
Oppenheimer Quest Growth $ 2,726,176 .85% of net assets
& Income Value Fund1
Enterprise Accumulation $2,108,010,440 .40% on the first $1 billion; .30%
Trust: on assets over $1 billion(2)
Managed Portfolio
Enterprise Group of Funds $ 249,013,537 .40% on the first $100 million;
Managed Portfolio .30% on assets in excess of $100
million(3)
Endeavor Series Trust: $ 4,518,408 .40%(4)
Opportunity Value
Portfolio
OCC Accumulation Trust: $ 214,452,435 .80% on the first $400 million;
Managed Portfolio .75% on the next $400 million;
.70% of net assets in excess of
$800 million(5)
WNL Series Trust:
Elite Value Asset $ 2,756,931 .40%(6)
Allocation Portfolio
</TABLE>
1 With respect to each of these funds, Oppenheimer Funds, Inc. ("OFI") is the
investment adviser and OpCap Advisors is the sub-adviser. OFI pays OpCap
Advisors monthly an annual fee based on the average daily net assets of the fund
as of November 22, 1995 (the
"base amount") plus 30% of the investment advisory fee collected by OFI based on
the total net assets of the fund that exceed the base amount.
2This fee is for investment advisory services only. Management services are
provided to the portfolios by a third party, not OpCap Advisors. The Manager,
who pays the investment advisory fee to OpCap Advisors, receives a management
fee, on an annual basis, of 0.80% of the first $400 million of average daily net
assets; .75% on the next $400 million and .70% on assets above $800 million of
the portfolio.
3This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The Manager, who
pays the investment advisory fee to OpCap Advisors, receives a management fee of
.75% of the average daily net assets of the portfolio.
4This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The Manager, who
pays the investment advisory fee to OpCap Advisors, receives a management fee of
.80% of average daily net assets of the portfolio. OpCap Advisors has agreed to
waive its fee until the assets of the portfolio are $25 million or until six
months after the inception date of the portfolio.
5OpCap Advisors has agreed to waive its fee and reimburse expenses so that
operating expenses (net of any expense offsets) do not exceed 1.25% of the
portfolio's average daily net assets and on a voluntary basis, until December
31, 1997, so that expenses do not exceed 1.00% of the portfolio's average daily
net assets..
6This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The Manager, who
pays the investment advisory fee to OpCap Advisors, receives a management fee of
.65% of the average daily net assets of the portfolio.
EXHIBIT C
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of ________________, 1994, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
SELECT ADVISORS PORTFOLIOS, a New York master trust created pursuant to a
Declaration of Trust dated February 7, 1994, 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, interests in the Trust are divided into separate subtrusts
(each, along with any subtrust which may in the future be established, a
"Portfolio"); 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 Portfolio 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 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 subadvisors for any Portfolio. Any agreement
between the Advisor and a subadvisor shall be subject to the renewal,
termination and amendment provisions of paragraph 10 hereof. The Advisor
undertakes to provide the following services and to assume the following
obligations:
a) The Advisor will manage the
investment and reinvestment of the assets of each
Portfolio, subject to and in accordance with the
respective investment objectives and policies of each
Portfolio 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 ("Portfolio Advisor(s)") to make
all determinations with respect to the investment of
the assets of each Portfolio, 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 Portfolio 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 Portfolio Advisor to, render regular
reports to the Trust's Board of Trustees concerning
the Trust's and each Portfolio's investment
activities.
b) The Advisor shall, or shall cause
the respective Portfolio Advisor(s) to place orders
for the execution of all portfolio transactions, in
the name of the respective Portfolio 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 Portfolio
Advisors to create and maintain) all necessary
brokerage records for each Portfolio, 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
Portfolio Advisor) for the periods and in the places
required by Rule 31a-02 under the 1940 Act.
c. In the event of any
reorganization or other change in the Advisor, its
investment principals, supervisors or members of its
investment (or comparable) committee, the Advisor
shall give the Trust's Board of Trustees written
notice of such reorganization or change within a
reasonable time (but not later than 30 days) after
such reorganization or change.
d) The Advisor shall bear its
expenses of providing services to the Trust pursuant
to this Agreement except such expenses as are
undertaken by the Trust. In addition, the Advisor
shall pay the salaries
and fees, if any, of all Trustees, officers and
employees of the Trust who are affiliated persons, as
defined in Section 2(a)(3) of the 1940 Act, of the
Advisor.
e) The Advisor will manage, or will
cause the Portfolio Advisors to manage, the Portfolio
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 Portfolio's auditor's; (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 Portfolios; (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 interests in 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 interest holders
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; (x) the cost of preparing and printing share
certificates; and (xi) 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
Portfolio set forth on Schedule 1 attached hereto
(and with respect to any future Portfolio, 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 Portfolio's net assets shall be computed by the
same method as the Trust uses to compute the net
asset value of that Portfolio.
b) The Advisor will pay all fees
owing to each Portfolio Advisor, and the Trust shall
not be obligated to the Portfolio Advisors in any
manner with respect to the compensation of such
Portfolio Advisors.
c) The Advisor reserves the right to
waive all or a part of its fee.
5. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the Trust
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. It is understood that the Trustees and
officers of the Trust are or may become interested in the Advisor as
stockholders, officers or otherwise, and that stockholders and officers of the
Advisor are or may become similarly interested in the Trust, and that the
Advisor may become interested in the Trust as a shareholder or otherwise.
6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; except that the Trust may use
such name in any document which merely refers in accurate terms to its
appointment hereunder or in any situation which is required by the SEC or a
state securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Advisor will not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; except that the Advisor may use such name in any document
which merely refers in accurate terms to the appointment of the Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission. In all other cases, the parties may use such names to the extent
that the use is approved by the party named, it being agreed that in no event
shall such approval be unreasonably withheld.
The Trustees of the Trust acknowledge that, in consideration
of the Advisor's assumption of certain organization expenses of the Trust and of
the various Portfolios, the Advisor has reserved for itself the rights to the
name "Select Advisors Portfolios" (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 holder of an interest in any Portfolio 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 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
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: (a) the Advisor shall provide security in form and amount
acceptable to the Trust for its undertaking; (b) the 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 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 interests in any Portfolio 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 twelve months from the date
hereof and it shall continue indefinitely thereafter
as to each Portfolio, 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 Portfolio 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 Portfolio(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
Portfolio(s) upon 60 days' prior written notice to
the Advisor and by the Advisor upon 60 days' prior
written notice to the Trust.
c) This Agreement may be amended at
any time by the parties hereto, subject to approval
by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of any
Portfolio 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 inn their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Declaration of Trust, dated as of February 7, 1994, the
obligations of this Agreement are not
binding upon any of the Trustees or interestholders of the Trust individually,
but bind only the Trust estate.
SELECT ADVISORS PORTFOLIOS
By ________________________________
Edward G. Harness, Jr., President
Attest:
- ---------------------------
TOUCHSTONE ADVISORS, INC.
By ________________________________
Jill T. McGruder, Vice President
Attest:
- ---------------------------
AMENDMENT NO. 1
INVESTMENT ADVISORY AGREEMENT
This Amendment No. 1 to Investment Advisory Agreement is dated as of
May 1, 1997 and amends the Investment Advisory Agreement (the "Advisory
Agreement") dated September 9, 1994 made by and between Touchstone Advisors,
Inc., an Ohio corporation (the "Advisor"), and Select Advisors Portfolios, a New
York master trust created pursuant to a Declaration of Trust dated February 7,
1994 (the "Trust").
WHEREAS, the Advisor acts as investment advisor to the Trust pursuant
to the Advisory Agreement; and in such capacity the Advisor has engaged separate
portfolio advisors for each of the Trust's portfolios; and
WHEREAS, the Trust, by its Board of Trustees, has taken action to
terminate the Trust's Municipal Bond Portfolio and the Portfolio Advisory
Agreement, dated September 9, 1994, presently in effect between the Advisor and
Neuberger & Berman, Portfolio Advisor to such portfolio, each as of the close of
business on April 30, 1997; and
WHEREAS, such Board of Trustees also has taken action to terminate
Portfolio Advisory Agreements presently in effect between the Advisor and Harbor
Capital Management Company, Inc. ("Harbor Capital") and Morgan Grenfell Capital
Management, Inc. ("Morgan Grenfell"), each such Portfolio Advisory Agreement
being dated as of September 9, 1994; and
WHEREAS, such Board of Trustees also has taken action to enter into a
Portfolio Advisory Agreement with Op Cap Advisors, a subsidiary of Oppenheimer
Capital, a registered investment advisor, under which Op Cap Advisors will act
as Portfolio Advisor to the Trust's Balanced Portfolio, replacing Harbor Capital
and Morgan Grenfell; and
WHEREAS, the advisory fees to be paid to Op Cap Advisors under such
Portfolio Advisory Agreement will be higher than the fees currently being paid
to Harbor Capital and Morgan Grenfell under their Portfolio Advisor Agreements;
and
WHEREAS, the trust is agreeable to an increase in the fees being paid
under the Advisory Agreement sufficient to offset the increase in fees to be
paid to Op Cap Advisors, having found that such increased fees are comparable to
the average fees being paid to advisors of balanced portfolios generally.
NOW, THEREFORE, Schedule 1 to the Advisory Agreement is hereby amended,
effective as of the close of business on April 30, 1997, to read as set forth in
Exhibit A to this Amendment, the only changes in such Schedule being an increase
in the advisory fees to be paid by the Balanced Portfolio, from 0.70% to 0.80%
of average daily net assets, and the deletion of the Municipal Bond Portfolio.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered in their names and on their behalf as of the day and year
first above written.
SELECT ADVISORS PORTFOLIO
By:_________________________________
Edward G. Harness, Jr., President
TOUCHSTONE ADVISORS INC.
By:____________________________________
Exhibit A to
Amendment No 1 to Advisory
Agreement
SCHEDULE 1
Emerging Growth Portfolio 0.80%
International Equity Portfolio 0.95%
Growth & Income Portfolio 0.75%
Growth & Income Portfolio II 0.75%
Balanced Portfolio 0.80%
Income Opportunity 0.65%
Bond Portfolio 0.55%
Bond Portfolio II 0.55%
0103544.05
TOUCHSTONE BALANCED FUND A
(A SEPARATE SERIES OF SELECT ADVISORS TRUST A)
AND
TOUCHSTONE BALANCED FUND C
(A SEPARATE SERIES OF SELECT ADVISORS TRUST C)
THIS SOLICITATION IS MADE ON BEHALF OF THE TRUSTEES OF
SELECT ADVISORS TRUST A AND SELECT ADVISORS TRUST C, RESPECTIVELY
The undersigned appoints Edward G. Harness, Jr. and Edward S. Heenan
and each of them, with full power of substitution, as attorneys and proxies of
the undersigned, and does thereby request that the votes attributable to the
undersigned be cast at the Meeting of Shareholders of the Touchstone Balanced
Fund A ( a separate series of Select Advisors Trust A (a "Trust")) and
Touchstone Balanced Fund C (a separate series of Select Advisors Trust C (a
"Trust")) to be held at 10:00 a.m. on April 23, 1997 at the offices of the
Trusts, 311 Pike Street, Cincinnati, Ohio, and at any adjournment thereof. If a
proxy is not received from a particular shareholder, then the votes attributable
to him or her will be allocated in the same ratio as votes for which
instructions have been received.
- --------------------------------------------------------------------------------
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BELOW, OR IF NO
DIRECTION IS INDICATED, WILL BE VOTED FOR THE PROPOSAL BELOW.
THE BOARD OF TRUSTEES OF EACH TRUST RECOMMENDS A VOTE FOR THE PROPOSAL.
PLEASE VOTE BY CHECKING YOUR RESPONSE.
1. Approval of New Portfolio FOR o AGAINST o ABSTAIN o
Advisory Agreement between
Touchstone Advisors, Inc.
and OpCap Advisors and
Amendment to Investment
Advisory Agreement between
Select Advisors Portfolios,
on behalf of the Balanced
Portfolio, and Touchstone
Advisors, Inc.
2. In their discretion, to act FOR o AGAINST o ABSTAIN o
upon such other matters as
may properly come before
the meeting.
TOTAL SHARES ATTRIBUTABLE TO THE UNDERSIGNED:
PLEASE VOTE, DATE, SIGN EXACTLY NOTE: THE UNDERSIGNED HEREBY
AS YOUR NAME APPEARS BELOW, AND ACKNOWLEDGES RECEIPT OF
RETURN THIS FORM IN THE ENCLOSED THE NOTICE OF MEETING AND
SELF-ADDRESSED ENVELOPE. PROXY STATEMENT AND
REVOKES ANY PROXY
HERETOFORE GIVEN WITH
RESPECT TO THE VOTES
COVERED BY THIS PROXY.
Dated: ___________________, 1997
------------------------------
Signature
------------------------------
Signature If Jointly Held
