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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
SELECT ADVISORS TRUST A
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] 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: ...........................................................
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<PAGE> 2
PRELIMINARY COPY DRAFT-12/14/98
TOUCHSTONE GROWTH & INCOME FUND
(a series of Touchstone Series Trust)
311 Pike Street
Cincinnati, Ohio 45202
800-669-2796
NOTICE OF SPECIAL MEETING
Notice is hereby given that a Special Meeting (the "Meeting") of
shareholders of Touchstone Growth & Income Fund (the "Fund"), a separate series
of Touchstone Series Trust (the "Trust"), will be held on January 28, 1999 at
10:00 a.m., Cincinnati Time, at the offices of the Trust, 311 Pike Street,
Cincinnati, Ohio 45202. At the Meeting, shareholders of the Fund will be asked
to consider and collectively vote upon the following:
(1) To approve or disapprove a new sub-advisory agreement (the
"January 1999 Agreement") between Touchstone Advisors, Inc. (the
"Advisor") and Scudder Kemper Investments, Inc. ("Scudder Kemper")
pursuant to which Scudder Kemper will act as sub-advisor with
respect to the assets of the Fund.
(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 January 5, 1999, are
entitled to notice of, and to vote at, the Meeting. The accompanying Proxy
Statement contains more information about the Meeting. Whether you plan to
attend the Meeting or not, 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 the Trust.
Andrew S. Josef
Secretary
Cincinnati, Ohio
January 5, 1999
<PAGE> 3
PRELIMINARY COPY DRAFT-12/14/98
TOUCHSTONE GROWTH & INCOME FUND
(a series of Touchstone Series Trust)
311 Pike Street
Cincinnati, Ohio 45202
800-669-2796
PROXY STATEMENT
This Proxy Statement is furnished by Touchstone Series Trust (the
"Trust") to the Class A, Class C and Class Y shareholders (the "Fund
Shareholders" or the "Shareholders") of its Touchstone Growth & Income Fund (the
"Fund") on behalf of the Trust's Board of Trustees (the "Board of Trustees" or
the "Trustees") in connection with the Trust's solicitation of the accompanying
proxy. This proxy will be voted at a Special Meeting of Fund Shareholders (the
"Meeting") to be held on January 28, 1999 at 10:00 a.m., Cincinnati Time, at the
offices of the Trust, 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 Shareholders on or about January __, 1999.
At the Meeting, Shareholders will be asked to consider and vote upon
the following:
(1) To approve or disapprove a new portfolio advisory agreement (the
"January 1999 Agreement") between Touchstone Advisors, Inc. (the
"Advisor") and Scudder Kemper Investments, Inc. ("Scudder Kemper")
pursuant to which Scudder Kemper will act as sub-advisor with
respect to the assets of the Fund.
(2) To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only Shareholders of record at the close of business on January 5, 1999
(the "Record Date") will be entitled to vote at the Meeting.
REQUIRED VOTE AND BOARD RECOMMENDATION
The affirmative vote of the holders of a "majority of the outstanding
voting securities" (as defined in the Investment Company Act of 1940, as amended
(the "Act")) of the Fund is required to approve the January 1999 Agreement. The
vote of a "majority of the outstanding voting securities" of the Fund means the
lesser of (1) the vote of 67% or more of the shares of the Fund present at the
Meeting, if the holders of more than 50% of the shares of the Fund are present
or represented by proxy at the Meeting, or (2) the vote of more than 50% of the
shares of the Fund.
<PAGE> 4
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE THE JANUARY 1999 AGREEMENT.
CERTAIN SHARE OWNERSHIP INFORMATION
The following share ownership information is presented as of the Record
Date. WSLAC refers to Western-Southern Life Assurance Company. WSLAC has
indicated that it intends to vote at the Meeting for the approval of the January
1999 Agreement.
<TABLE>
<CAPTION>
Percentage of Total
Percentage of Total Outstanding Shares of
Number of Shares Outstanding Shares of the Class or Fund Owned
Outstanding Fund by WSLAC
- ----------------------------- ----------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Class A Shares 00000.00
Class C Shares
Class Y Shares 100.00%
Total Fund Shares 100.00%
</TABLE>
CERTAIN VOTING MATTERS
Each share of the Fund is entitled to one vote and each fractional
share is entitled to a proportionate share of one vote. Shareholders of each of
the three classes of shares will vote together.
The persons named in the accompanying proxy will vote as directed by
the proxy. If a proxy is signed and returned but does not give voting
directions, it will be voted FOR the proposal. With respect to any other matters
(none of which are now known to the Trust's Board of Trustees) that may be
presented at the Meeting, all proxies will be voted in the discretion of the
persons appointed as proxies.
If a Shareholder signs and returns a proxy but abstains from voting,
the shares represented by the proxy will be counted as present and entitled to
vote on the proposal 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 a 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.
A Shareholder may revoke the accompanying proxy at any time prior to
its use by filing with the Secretary of the Trust a written revocation or duly
executed proxy bearing a later date. The proxy will not be voted if a
Shareholder is present at the Meeting and elects to vote in person. Attendance
at the Meeting alone will not serve to revoke the proxy.
2
<PAGE> 5
APPROVAL OR DISAPPROVAL
OF THE JANUARY 1999 AGREEMENT BETWEEN
THE ADVISOR AND SCUDDER KEMPER
INTRODUCTION
The Fund's investment advisor is Touchstone Advisors, Inc. (the
"Advisor"). The Advisor, on behalf of the Fund, has engaged Scudder Kemper to
manage the investments of the Fund. The Meeting has been called for the purpose
of considering a new sub-advisory agreement (the "January 1999 Agreement")
between the Advisor, on behalf of the Fund, and Scudder Kemper.
BACKGROUND
Before January 1, 1999, the Trust was known as Select Advisors Trust A
and the Fund was known as Touchstone Growth & Income Fund A ("Fund A"). Select
Advisors Trust A and Fund A were part of a two-tier master/feeder mutual fund
structure, referred to as a Hub and Spoke(R) structure.1 In the Hub and Spoke
structure, Fund A invested all of its investable assets in the Growth & Income
Portfolio (the "Portfolio") of Select Advisors Portfolios (the "Portfolio
Trust"). In addition, Touchstone Growth & Income Fund C ("Fund C") of Select
Advisors Trust C invested all of its investable assets in the Portfolio. WSLAC
also invested directly in the Portfolio. Fund A, Fund C and WSLAC were the only
"spokes" that invested in the Portfolio.
SCUDDER AGREEMENT
The Advisor served as the investment advisor to the Portfolio Trust.
The Advisor, in turn, engaged a portfolio advisor to manage the Portfolio. The
Advisor, on behalf of the Portfolio, entered into a portfolio advisory agreement
with Scudder, Stevens & Clark, Inc. ("Scudder") dated as of September 1, 1997
(the "Scudder Agreement"). The Board of Trustees of the Portfolio Trust approved
the Scudder Agreement at a meeting held on August 15, 1997. The shareholders of
Fund A and the shareholders of Fund C (the "A&C Shareholders") and the interest
holders of the Portfolio approved the Scudder Agreement on September 18, 1997.
JANUARY 1998 AGREEMENT
On June 26, 1997, Scudder entered into an agreement with Zurich
Insurance Company ("Zurich") pursuant to which Scudder and Zurich agreed to form
an alliance. On December 31, 1997, Zurich acquired a majority interest in
Scudder and Zurich Kemper Investments, Inc. ("Kemper"), a subsidiary of Zurich,
became part of Scudder. Scudder's name was changed to Scudder Kemper
Investments, Inc.
- -----------------
1 "Hub and Spoke" is a registered service mark of Signature Financial Group,
Inc. ("Signature"). The terms "Hub" and "Spoke" are service marks of Signature.
3
<PAGE> 6
This transaction (the "Scudder-Zurich Transaction") resulted in the
termination of the Scudder Agreement. Consequently, the Advisor, on behalf of
the Portfolio, entered into a new portfolio advisory agreement with Scudder
Kemper dated as of January 1, 1998 (the "January 1998 Agreement"). The January
1998 Agreement was substantially identical to the Scudder Agreement, except for
the effective and termination dates and the change to Scudder's name. The Board
of Trustees of the Portfolio Trust approved the January 1998 Agreement at a
meeting held on August 15, 1997. The A&C Shareholders and the interest holders
of the Portfolio approved the January 1998 Agreement on September 18, 1997.
SEPTEMBER 1998 AGREEMENT
On September 7, 1998, Zurich consummated a transaction (the
"Zurich-B.A.T Transaction") whereby businesses of Zurich, including Zurich's 70%
interest in Scudder Kemper, were combined with the financial services businesses
of B.A.T Industries p.l.c. ("B.A.T") to form a new global insurance and
financial services company, known as Zurich Financial Services. By way of a dual
holding company structure, Zurich's shareholders own approximately 57% of the
new organization, with the balance owned by B.A.T's shareholders.
Completion of the Zurich-B.A.T Transaction may be deemed to represent a
change in the ownership of Scudder Kemper and, as such, had the effect of
terminating the January 1998 Agreement. Consequently, the Advisor, on behalf of
the Portfolio, entered into a new portfolio advisory agreement with Scudder
Kemper dated as of September 7, 1998 (the "September 1998 Agreement"). The Board
of Trustees of the Portfolio Trust approved the September 1998 Agreement at a
meeting held on September 2, 1998. THE SEPTEMBER 1998 AGREEMENT WAS
SUBSTANTIALLY IDENTICAL TO THE JANUARY 1998 AGREEMENT, EXCEPT FOR THE EFFECTIVE
AND TERMINATION DATES.
Scudder Kemper received an order (the "Order") from the Securities and
Exchange Commission (the "Commission") permitting the various registered
investment companies (the "Affected Funds") for which it served as investment
advisor or sub-advisor to obtain shareholder approval of new investment advisory
agreements within 150 days of the consummation of the Zurich-B.A.T Transaction,
which occurred on September 7, 1998 (and, consequently, within 150 days after
the termination of its former investment advisory agreement), instead of before
the consummation of the Zurich-B.A.T Transaction. In the remainder of this Proxy
Statement, September 7, 1998 is referred to as the "Zurich-B.A.T Closing Date"
and the 150 day period beginning September 7, 1998 is referred to as the
"Interim Period."
Pursuant to the Order, each Affected Fund's investment management fees
payable to Scudder Kemper are being held in escrow until the earlier of
shareholder approval of a new investment advisory agreement or the expiration of
the Interim Period. In addition, Scudder Kemper agreed to take all appropriate
steps to ensure that the scope and quality of investment advisory services
provided to an Affected Fund by Scudder Kemper during the Interim Period will be
at least equivalent in the judgment of the Board of Directors (or Trustees) of
the
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<PAGE> 7
Affected Fund to the scope and quality of services provided by Scudder Kemper
under its former investment advisory agreement.
THE TRUST REORGANIZATION
As of December 31, 1998, each of Fund A and Fund C withdrew its
investment from the Portfolio Trust as part of a Reorganization of the
Touchstone mutual fund complex (the "Reorganization"). As part of the
Reorganization, the following actions were taken.
- The name of Select Advisors Trust A was changed to Touchstone
Series Trust.
- The name of Fund A was changed to Touchstone Growth & Income
Fund.
- Three classes of shares, Class A, Class C and Class Y, were
established in the Fund.
- Shares of the Fund outstanding on December 31, 1998 were retitled
as Class A shares.
- The Fund acquired all of the assets, subject to the liabilities,
of Fund C in exchange for the Fund's Class C shares and the Class
C shares were distributed pro rata to the shareholders of Fund C.
- WSLAC, which previously invested directly in the Portfolio,
became the sole shareholder of the Fund's Class Y shares.
As a result of the Reorganization, all of the persons who beneficially
owned shares of beneficial interest of the Portfolio as of December 31, 1998 are
now Fund Shareholders. Shareholders of Fund A became Class A shareholders of the
Fund, shareholders of Fund C became Class C shareholders of the Fund, and WSLAC
became the Class Y shareholder of the Fund.
JANUARY 1999 AGREEMENT
In connection with the Reorganization, the Trust entered into an
investment advisory agreement with the Advisor dated as of January 1, 1999. In
turn, the Advisor, on behalf of the Fund, entered into a new sub-advisory
agreement with Scudder Kemper dated January 1, 1999 (the "January 1999
Agreement"). The Board of Trustees approved the January 1999 Agreement at a
meeting held on December 17, 1998.
THE JANUARY 1999 AGREEMENT EMBODIES THE SAME TERMS AND FEES AS THE
JANUARY 1998 AGREEMENT AND IS SUBSTANTIALLY IDENTICAL TO THE SEPTEMBER 1998
AGREEMENT AND THE JANUARY 1998 AGREEMENT. The January 1999 Agreement differs
from the September 1998 and the January 1998 Agreement only in the following
ways:
- the January 1999 Agreement indicates that the Advisor is acting
on behalf of the Fund rather than the Portfolio,
- references in the January 1999 Agreement are to the Fund and the
Trust rather than the Portfolio and the Portfolio Trust,
5
<PAGE> 8
- related changes in terminology and other conforming changes are
reflected in the January 1999 Agreement, and
- the effective and termination dates are different.
The January 1999 Agreement also provides that it will terminate if it
is not approved by the Fund Shareholders within 150 days of the Zurich-B.A.T
Closing Date. The January 1998 Agreement did not include this provision as it
was executed prior to the announcement of the Zurich-B.A.T Transaction. This
termination provision, however, is substantially identical to the provision in
the September 1998 Agreement except that it refers to approval by a majority of
the outstanding voting securities of the Fund rather than the Portfolio.
SHAREHOLDER APPROVAL REQUIREMENT
Fund Shareholders are being asked to approve the January 1999 Agreement
because, pursuant to its terms and the Order, it will terminate if it is not
approved by the Fund Shareholders during the Interim Period, which ends on
February 4, 1999.
COPIES OF THE JANUARY 1999 AGREEMENT
A copy of the January 1999 Agreement is attached to this Proxy
Statement as Exhibit A-1, and the description set forth in this Proxy Statement
of the January 1999 Agreement is qualified in its entirety by reference to
Exhibit A-1. A marked copy of the January 1999 Agreement is also attached to the
Proxy Statement as Exhibit A-2. The marked copy shows differences between the
January 1999 Agreement and the January 1998 Agreement.
TERMS OF THE JANUARY 1999 AGREEMENT
Under the January 1999 Agreement, Scudder Kemper is entitled to receive
from the Advisor a monthly fee on an annual basis equal to 0.50% of the first
$150 million of the combined average daily net assets of the Fund and another
similar fund (the "Affiliated Fund") in the Touchstone complex (which is also
managed by Scudder Kemper for the Advisor) and 0.45% of the combined average
daily net assets of the Fund and the Affiliated Fund in excess of $150 million.
THIS FEE ARRANGEMENT IS SUBSTANTIALLY IDENTICAL TO THE FEE ARRANGEMENT
CONTAINED IN THE SEPTEMBER 1998 AGREEMENT, THE JANUARY 1998 AGREEMENT AND THE
SCUDDER AGREEMENT.
For the fiscal year ended December 31, 1998, the Advisor paid Scudder
Kemper $__________ for its portfolio advisory services. At January 5, 1999, the
net assets of the Fund and the Affiliated Fund under Scudder Kemper's management
were approximately $_____________.
Under the January 1999 Agreement, Scudder Kemper will provide certain
investment advisory services to the Fund, including deciding what securities
will be purchased and sold by
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<PAGE> 9
the Fund, when such purchases and sales are to be made, and arranging for such
purchases and sales, all in accordance with the provisions of the Act and any
rules thereunder, the governing documents of the Trust, the fundamental policies
of the Trust and the Fund, any directions that the Advisor or the Board of
Trustees may give from time to time with respect to the Fund, and any applicable
state or federal laws. In addition, Scudder Kemper will determine the manner in
which voting rights, rights to consent to corporate action and any other rights
pertaining to the Fund's portfolio securities will be exercised.
If the January 1999 Agreement is approved at the Meeting, it will
continue in effect until December 31, 1999, and will continue in effect
thereafter for successive annual periods, provided its continuance is
specifically approved at least annually by (1) a majority vote, cast in person
at a meeting called for that purpose, of the Trust's Board of Trustees or a vote
of the holders of a "majority of the outstanding voting securities" (as defined
in the Act) of the Fund, and (2) a majority of the Trustees who are not parties
to the January 1999 Agreement or "interested persons" (as defined in the Act) of
the Trust or of Scudder Kemper.
The January 1999 Agreement provides that it may be terminated at any
time, without penalty, (1) by the Advisor, by the Trustees of the Trust or by a
vote of the majority of the outstanding voting securities of the Fund, upon 60
days written notice, or (2) by Scudder Kemper upon 60 days written notice to the
Advisor and the Trust. The January 1999 Agreement will also terminate upon
written notice by one party to the other party that the other party is in
material breach of the January 1999 Agreement, unless the party in material
breach of the January 1999 Agreement cures such breach to the reasonable
satisfaction of the party alleging the breach within 30 days after written
notice. In addition, the January 1999 Agreement will terminate if it is not
approved by the Fund Shareholders on or before February 4, 1999.
The affiliated brokerage provisions in the January 1999 Agreement
permit Scudder Kemper to place brokerage transactions with broker-dealers
affiliated with Scudder Kemper ("Affiliated Brokers"). However, the January 1999
Agreement provides that an Affiliated Broker may effect securities transactions
for the Fund only if (1) the commissions, fees or other remuneration received or
to be received by an Affiliated Broker 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
of the Trust, have adopted procedures pursuant to Rule 17e-1 under the Act for
determining the permissible level of such commissions. The Board of Trustees has
previously adopted such procedures.
The January 1999 Agreement states that Scudder Kemper's primary
objective when placing orders with brokers and dealers will be to obtain the
most favorable price and execution available for the Fund. In placing these
orders Scudder Kemper may consider a number of factors, including the overall
direct net economic result to the Fund (including commissions, which may not be
the lowest available but ordinarily should not be higher than the generally
prevailing competitive rate), the financial strength and stability of the
broker, the
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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 execute possibly difficult transactions in the future.
Scudder Kemper is specifically authorized, to the extent authorized by law, to
pay a broker or dealer who provides research services to Scudder Kemper 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 payments are permissible only if Scudder
Kemper 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 Fund derives or will derive a reasonably
significant benefit from such research services.
Scudder Kemper will provide, at its expense, all necessary investment
and management facilities, including salaries of personnel required for it to
faithfully execute its duties, and administrative facilities, including clerical
personnel and equipment necessary for it to conduct the investment advisory
affairs of the Fund efficiently (excluding pricing and bookkeeping services).
Scudder Kemper is not obligated to pay any expenses for the Fund that are not
expressly assumed.
The January 1999 Agreement provides that Scudder Kemper shall have no
liability to the Trust, to any Shareholders of the Fund, or to the Advisor for
any act or omission in the course of, or in connection with, rendering services
under the January 1999 Agreement, except for liability resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
Scudder Kemper in the performance of its duties under the January 1999
Agreement.
The services to be provided by Scudder Kemper under the January 1999
Agreement, the procedures for continuing and terminating the January 1999
Agreement (other than the automatic termination resulting from failure to obtain
Shareholder approval on or before February 4, 1999), and the brokerage and
liablity provisions are SUBSTANTIALLY IDENTICAL to those of the January 1998
Agreement.
THE ZURICH-B.A.T TRANSACTION
On December 22, 1997, Zurich and B.A.T entered into a definitive
agreement (the "Merger Agreement") pursuant to which businesses of Zurich
(including Zurich's almost 70% ownership interest in Scudder Kemper) were to be
combined with the financial services businesses of B.A.T. On October 12, 1997,
Zurich and B.A.T had confirmed that they were engaged in discussions concerning
a possible business combination; on October 16, 1997, Zurich and B.A.T announced
that they had entered into an Agreement in Principle, dated as of October 15,
1997 (the "Agreement in Principle"), to merge B.A.T's financial services
businesses with Zurich's businesses. The Merger Agreement superseded the
Agreement in Principle.
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<PAGE> 11
In order to effect this combination, Zurich and B.A.T first reorganized
their respective operations. Zurich became a subsidiary of a new Swiss holding
company, Zurich Allied AG, and Zurich shareholders became Zurich Allied AG
shareholders. At the same time, B.A.T separated its financial services business
from its tobacco-related businesses by spinning off to its shareholders a new
British company, Allied Zurich p.l.c., which held B.A.T's financial services
businesses.
Zurich Allied AG then contributed its interest in Zurich, and Allied
Zurich p.l.c. contributed the B.A.T financial services businesses, to a jointly
owned company, Zurich Financial Services, in each case in exchange for shares of
Zurich Financial Services. These transactions were completed on September 7,
1998. As a result, upon the completion of the Zurich-B.A.T Transaction, the
former Zurich shareholders became the owners (through Zurich Allied AG) of 57%
of the voting stock of Zurich Financial Services, and former B.A.T shareholders
initially became the owners (through Allied Zurich p.l.c.) of 43% of the voting
stock of Zurich Financial Services. Zurich Financial Services now owns Zurich
and the financial services businesses previously owned by B.A.T.
Consummation of the Zurich-B.A.T Transaction may be deemed to have
constituted an "assignment," as that term is defined in the Act, of the January
1998 Agreement with Scudder Kemper. As required by the Act, the January 1998
Agreement provided for its automatic termination in the event of its assignment.
Accordingly, the Advisor, on behalf of the Portfolio, entered into the September
1998 Agreement, which was approved by the Board of Trustees of the Portfolio
Trust on September 2, 1998. Except for the Reorganization, the September 1998
Agreement would have been submitted for approval by the A&C Shareholders and the
interest holders of the Portfolio. Since the January 1999 Agreement became
effective during the Interim Period, the January 1999 Agreement is now being
submitted for approval by the Fund Shareholders.
INFORMATION ABOUT ZURICH
Founded in 1872, Zurich is a multinational, public corporation
organized under the laws of Switzerland. Its home office (and the home offices
of Zurich Financial Services and Zurich Allied AG) is located at Mythenquai 2,
8002 Zurich, Switzerland. Historically, Zurich's earnings have resulted from its
operations as an insurer as well as from its ownership of its subsidiaries and
affiliated companies (the "Zurich Insurance Group"). Zurich and the Zurich
Insurance Group provide an extensive range of insurance products and services
and have branch offices and subsidiaries in more than 40 countries throughout
the world. Zurich owns approximately 70% of Scudder Kemper, with the balance
owned by Scudder Kemper's officers and employees.
INFORMATION ABOUT B.A.T'S FINANCIAL SERVICES BUSINESSES
B.A.T's financial services businesses include: the Farmer's Group of
Insurance companies; Eagle Star Reinsurance Company Ltd., UK ("Eagle Star")
(which Zurich Financial Services has agreed to sell to GE Capital);
Allied-Dunbar, one of the leading U.K. unit-linked
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<PAGE> 12
life insurance and pensions companies; and Threadneedle Asset Management, which
was formed initially to manage the investment assets of Eagle Star and
Allied-Dunbar, and which, at December 31, 1997, had $58.8 billion under
management. Overall, at year end 1997, the financial services businesses of
B.A.T had $79 billion in assets under management, including $18 billion in
third-party assets.
Zurich has informed the Fund that the financial services businesses of
B.A.T do not include any of B.A.T's tobacco businesses and that, after careful
review, Zurich has concluded that the tobacco-related liabilities connected with
B.A.T's tobacco business should not adversely affect Zurich or the present
Zurich subsidiaries, including Scudder Kemper.
INFORMATION ABOUT SCUDDER KEMPER
Scudder Kemper maintains offices at 345 Park Avenue, New York, New York
10154. Scudder Kemper is a Delaware corporation and is registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act").
Scudder Kemper, an indirect subsidiary of Zurich which resulted from
the combination of the businesses of Scudder and Zurich Kemper Investments, Inc.
("Kemper"), is one of the largest and most experienced investment counsel firms
in the United States. Scudder was established in 1919 as a partnership and was
restructured as a Delaware corporation in 1985. Scudder launched its first fund
in 1928. Kemper launched its first fund in 1948. Since December 31, 1997,
Scudder Kemper has served as investment adviser to both Scudder and Kemper
funds. As of August 31, 1998, Scudder Kemper has more than $241.1 billion in
assets under management. The principal source of Scudder Kemper's income is
professional fees received from providing continuing investment advice. Scudder
Kemper provides investment counsel for many individuals and institutions,
including insurance companies, endowments, industrial corporations and financial
and banking organizations.
Exhibit B contains information about other registered investment
companies that are advised by Scudder Kemper and have an investment objective
similar to the Fund's investment objective.
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF SCUDDER KEMPER
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH SCUDDER KEMPER PRINCIPAL OCCUPATION
- ------------------------------------- ---------------------------------------- ---------------------------------------
<S> <C> <C>
Rolf Huppi Director and Chairman Officer of Zurich Financial Services
Mythenquai 2
Zurich, Switzerland
Edmond D. Villani Director, President and Chief Managing Director of Scudder
345 Park Avenue Executive Officer
New York NY 10154
</TABLE>
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<PAGE> 13
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH SCUDDER KEMPER PRINCIPAL OCCUPATION
- ------------------------------------- ---------------------------------------- ---------------------------------------
<S> <C> <C>
Stephen R. Beckwith Treasurer and Chief Financial Officer Managing Director of Scudder
345 Park Avenue
New York NY 10154
Kathryn L. Quirk General Counsel, Chief Compliance Managing Director of Scudder
345 Park Avenue Officer and Secretary
New York NY 10154
Lynn S. Birdsong Director and Vice President Managing Director of Scudder
345 Park Avenue
New York NY 10154
Cornelia M. Small Director and Vice President Managing Director of Scudder
345 Park Avenue
New York NY 10154
Laurence Cheng Director Senior Partner of Capital Z Partners,
Mythenquai 2 an investment fund
Zurich, Switzerland
Gunther Gose Director Chief Financial Officer of Zurich
Mythenquai 2 Financial Services
Zurich, Switzerland
William H. Bolinder Director Member of the Group Executive Board
1400 American Lane of Zurich Financial Services
Schaumburg, Illinois
</TABLE>
The outstanding voting securities of Scudder Kemper are held of record
as follows: 36.63% by Zurich Holding Company of America ("ZHCA"), a subsidiary
of Zurich; 32.85% by ZKI Holding Corp. ("ZKIH"), a subsidiary of Zurich; 20.86%
by Stephen R. Beckwith, Lynn S. Birdsong, Kathryn L. Quirk, Cornelia M. Small
and Edmond D. Villani, in their capacity as representatives (the "Management
Representatives") of Scudder Kemper's management holders and retiree holders
pursuant to a Second Amended and Restated Security Holders Agreement (the
"Security Holders Agreement") among Scudder Kemper, Zurich, ZHCA, ZKIH, the
Management Representatives, the management holders, the retiree holders and
Edmond D. Villani, as trustee of Scudder Kemper Investments, Inc., Executive
Defined Contribution Plan Trust (the "Plan Trust"); and 9.66% by the Plan Trust.
There are no outstanding non-voting securities of Scudder Kemper.
Pursuant to the Security Holders Agreement, the Board of Directors of
Scudder Kemper consists of four directors designated by ZHCA and ZKIH and three
directors designated by Management Representatives.
11
<PAGE> 14
The Security Holders Agreement requires the approval of a majority of
the Scudder-designated directors for certain decisions, including changing the
name of Scudder Kemper, effecting an initial public offering before April 15,
2005, causing Scudder Kemper to engage substantially in non-investment
management and related businesses, making material acquisitions or divestitures,
making material changes in Scudder Kemper's capital structure, dissolving or
liquidating Scudder Kemper, or entering into certain affiliated transactions
with Zurich. The Security Holders Agreement also provides for various put and
call rights with respect to Scudder Kemper stock held by persons who were
employees of Scudder at the time of the Scudder-Zurich Transaction, limitations
on Zurich's ability to purchase other asset management companies outside of
Scudder Kemper, rights of Zurich to repurchase Scudder Kemper stock upon
termination of employment of Scudder Kemper personnel, and registrations rights
for stock held by stockholders of Scudder continuing after the Scudder-Zurich
Transaction.
SHARE OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT
As of January 5, 1999, the following persons were record owners of more
than 5% of the outstanding Class A shares of the Fund:
<TABLE>
<CAPTION>
Name and Address of Record Owner Number of Shares Percent of Class
- --------------------------------------------------------- ----------------------------------- -----------------------
<S> <C> <C>
Western-Southern Life Assurance Company _____%
400 Broadway, Cincinnati OH 45202
</TABLE>
As of January 5, 1999, the following persons were record owners of more
than 5% of the outstanding Class C shares of the Fund:
<TABLE>
<CAPTION>
Name and Address of Record Owner Number of Shares Percent of Class
- --------------------------------------------------------- ----------------------------------- -----------------------
<S> <C> <C>
Western-Southern Life Assurance Company ______%
400 Broadway, Cincinnati OH 45202
</TABLE>
As of January 5, 1999, the following persons were record owners of more
than 5% of the outstanding Class Y shares of the Fund:
<TABLE>
<CAPTION>
Name and Address of Record Owner Number of Shares Percent of Class
- --------------------------------------------------------- ----------------------------------- -----------------------
<S> <C> <C>
Western-Southern Life Assurance Company 100%
400 Broadway, Cincinnati OH 45202
</TABLE>
12
<PAGE> 15
To the knowledge of the Trust, no other shareholder owned of record
more than 5% of the outstanding shares of any class of shares of the Fund as of
the same date. [AS OF JANUARY 5, 1999, THE TRUSTEES AND OFFICERS OF THE TRUST AS
A GROUP OWNED OF RECORD LESS THAN 1% OF THE OUTSTANDING SHARES OF THE FUND.]
TRUSTEES' EVALUATION OF THE SEPTEMBER 1998 AGREEMENT
On September 2, 1998, the Board of Trustees of the Portfolio Trust,
including the Trustees of the Portfolio Trust who were not parties to the
September 1998 Agreement or "interested persons" (as defined in the Act) of the
Portfolio or the Portfolio Trust (the "Independent Portfolio Trustees"),
approved the September 1998 Agreement.
For purposes of reviewing the September 1998 Agreement, Scudder Kemper
furnished the Board of Trustees of the Portfolio Trust, including the
Independent Portfolio Trustees, with information about the proposed Zurich-B.A.T
Transaction, including information provided to the shareholders of Zurich and
B.A.T and information about the structure of the proposed Zurich-B.A.T
Transaction, the resulting ownership and governance arrangements of Zurich and
the investment management business of B.A.T expected to be acquired by Scudder
Kemper following completion of the Zurich-B.A.T Transaction. Scudder Kemper also
advised the Board of Trustees of the Portfolio Trust that the proposed
Zurich-B.A.T Transaction would not have a material effect on the operations of
the Portfolio.
The Trustees of the Portfolio Trust also relied on representations by
Scudder Kemper that:
- no changes would be made in operational management or persons
ultimately in control of Scudder Kemper,
- the same Scudder Kemper personnel would continue to provide
advisory services to the Portfolio,
- Scudder Kemper would continue to be the global asset management
platform for the Zurich Group,
- the advisory services provided by Scudder Kemper would be
enhanced by the addition of B.A.T personnel, and
- the tobacco-related businesses of B.A.T would not adversely
affect B.A.T's financial services businesses.
Furthermore, the Board of Trustees of the Portfolio Trust considered the
commitment of Scudder Kemper to pay for or reimburse the Portfolio Trust and its
affiliates for expenses incurred in connection with the Zurich-B.A.T
Transaction.
The Trustees also considered that the compensation payable to Scudder
Kemper by the Advisor under the September 1998 Agreement was payable at the same
rate as the compensation payable by the Advisor to Scudder Kemper under the
January 1998 Agreement and that the terms of the September 1998 Agreement were
substantially unchanged from the January 1998 Agreement. Accordingly, the Board
of Trustees of the Trust concluded that the
13
<PAGE> 16
Fund would receive investment advisory services under the September 1998
Agreement that were equal or superior to those it received under the January
1998 Agreement, at the same fee levels.
TRUSTEES' EVALUATION OF THE JANUARY 1999 AGREEMENT
On December 17, 1998, the Board of Trustees of the Trust, including the
Trustees of the Trust who are not parties to the January 1999 Agreement or
"interested persons" (as defined in the Act) of the Fund or the Trust (the
"Independent Trustees"), approved the January 1999 Agreement. The Board of
Trustees believes that the terms of the January 1999 Agreement are fair to, and
in the best interest of, the Fund and the Shareholders and recommends that the
Shareholder approve the January 1999 Agreement.
In evaluating the January 1999 Agreement, the Board of Trustees
considered a number of factors, including:
- the nature, quality and extent of the services furnished by
- Scudder Kemper, Scudder Kemper's experience and investment
record,
- comparative data as to investment performance, advisory fees and
other fees, including fee and expense ratios of funds similar to
the Fund,
- the scope of Scudder Kemper's portfolio management activities,
- Scudder Kemper's investment philosophy and process
- the advantages and possible disadvantages to the Fund of having a
sub-adviser that also serves other investment companies as well
as other accounts, and
- Scudder Kemper's financial resources and the continuance of
appropriate incentives to assure that Scudder Kemper will
continue to furnish high quality services to the Fund.
The Trustees also considered that the compensation payable to Scudder Kemper by
the Advisor under the January 1999 Agreement is payable at the same rate as the
compensation payable by the Advisor to Scudder Kemper under the January 1998
Agreement and that the terms of the January 1999 Agreement are substantially
unchanged from the January 1998 Agreement.
GENERAL INFORMATION
PROXY SOLICITATION
The principal solicitation of proxies will be by mail, but proxies may
be solicited by telephone, facsimile and personal contact by directors, officers
and regular employees of the Advisor. All costs associated with the preparation,
filing and distribution of this Proxy Statement, the solicitation and the
Meeting will be borne by Scudder Kemper or its affiliates and not by the Fund or
the Trust.
14
<PAGE> 17
[INSERT INFORMATION ABOUT PROXY SOLICITATION FIRM]
OTHER MATTERS TO COME BEFORE THE MEETING
The Trust's 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 proxyholders will vote
thereon in accordance with their best judgment.
ADDITIONAL INFORMATION ABOUT THE ADVISOR AND OTHER SERVICE PROVIDERS
The Advisor is an indirect, wholly-owned subsidiary of WSLAC. The
address of the Advisor is 311 Pike Street, Cincinnati, Ohio 45202, and the
address of WSLAC is 400 Broadway, Cincinnati, Ohio 45202.
Touchstone Securities, Inc. serves as the principal underwriter of the
shares of the Trust, including shares of the Fund. The address of Touchstone
Securities, Inc. is 311 Pike Street, Cincinnati, Ohio 45202. For the fiscal year
ended December 31, 1997, Touchstone Securities, Inc. received $_________ in
underwriting commissions from the funds and portfolios in the Touchstone
complex.
Investors Bank & Trust Company provides administrative, custodial and
fund accounting services for the Trust and the Fund and serves as transfer agent
for the Trust. The address of Investors Bank is 200 Clarendon Street, Boston,
Massachusetts 02116.
PORTFOLIO TRANSACTIONS
The Fund does not allocate its portfolio brokerage on the basis of the
sale of its shares, although brokerage firms whose customers purchase shares of
the Fund may participate in brokerage commissions. During the fiscal year ended
December 31, 1997, brokerage transactions were not placed with any person
affiliated with the Fund, the Trust, the Portfolio, the Portfolio Trust, the
Advisor or Scudder Kemper.
SHAREHOLDER PROPOSALS
The Meeting is a special meeting of Shareholders. The Trust is not
required to, nor does it intend to, hold regular annual meetings of Fund
Shareholders. If a regular annual meeting is called, any shareholder who wishes
to submit a proposal for consideration at the meeting should submit the proposal
promptly to the Trust.
REPORTS TO SHAREHOLDERS
The Trust will furnish, without charge, a copy of the most recent
Annual Report to Shareholders and the most recent Semi-Annual Report succeeding
such Annual Report, if any, on request within three business days of the
request. Requests for such reports should be made
15
<PAGE> 18
by calling (800) 669-2796 (press 3) or by writing to the Trust, 311 Pike Street,
Cincinnati, Ohio 45202.
INFORMATION FROM SCUDDER
All information contained in this Proxy Statement and the accompanying
materials about Scudder, Scudder Kemper, Zurich, Zurich Financial Services,
B.A.T and their respective affiliates and the Zurich-B.A.T Transaction has been
provided by Scudder Kemper based upon information that Scudder Kemper received
from Zurich and its affiliates.
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 the Trust.
Andrew S. Josef
Secretary
January 5, 1999
Cincinnati, Ohio
16
<PAGE> 19
EXHIBIT A-1
JANUARY 1999 AGREEMENT
SUB-ADVISORY AGREEMENT
TOUCHSTONE GROWTH & INCOME FUND
TOUCHSTONE SERIES TRUST
This SUB-ADVISORY AGREEMENT is made as of January 1, 1999, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
SCUDDER KEMPER INVESTMENTS, INC., a Delaware corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Series Trust (formerly Select Advisors Trust A) (the "Trust"), a Massachusetts
business trust organized pursuant to a Declaration of Trust dated February 7,
1994 and registered as an open-end diversified management investment company
under the Investment Company Act of 1940 (the "1940 Act") to provide investment
advisory services to the Touchstone Growth & Income Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it
with portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject
to the Investment Advisory Agreement between the Trust and the Advisor, attached
hereto as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to it by the Advisor (the "Fund Assets"), subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Advisor hereby represents that (i)
it has authority under the Advisory Agreement to appoint the Sub-Advisor to act
as an investment advisor to the Trust, and (ii) this Agreement is valid and
binding upon the Advisor. The Sub-Advisor hereby accepts such employment and
agrees during such period to render the services and to perform the duties
called for by this Agreement for the compensation herein provided. The
Sub-Advisor shall at all times maintain its registration as an investment
advisor under the Investment Advisers Act of 1940 and shall otherwise comply in
all material respects with all
17
<PAGE> 20
applicable laws and regulations, both state and federal. The Sub-Advisor shall
for all purposes herein be deemed an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust or the Fund.
2. DUTIES OF THE SUB-ADVISOR. The Sub-Advisor will provide the
following services and undertake the following duties:
a. The Sub-Advisor will manage the investment and reinvestment
of the assets of the Fund, subject to and in accordance with the
investment objectives, policies and restrictions of the Fund and any
directions which the Advisor or the Trust's Board of Trustees may give
from time to time with respect to the Fund. In furtherance of the
foregoing, the Sub-Advisor will make all determinations with respect to
the investment of the assets of the Fund and the purchase and sale of
portfolio securities and shall take such steps as may be necessary or
advisable to implement the same. The Sub-Advisor also will determine
the manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the portfolio securities will
be exercised. The Sub-Advisor will render regular reports to the
Trust's Board of Trustees, to the Advisor and to BARRA RogersCasey,
Inc. (or such other advisor or advisors as the Advisor shall engage to
assist it in the evaluation of the performance and activities of the
Sub-Advisor). Such reports shall be made in such form and manner and
with respect to such matters regarding the Fund and the Sub-Advisor as
the Trust, the Advisor or BARRA RogersCasey, Inc.
shall from time to time reasonably request.
b. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund in a manner comparable to the
support provided to comparable clients of the Sub-Advisor, including
but not limited to: (i) permission to use the Sub-Advisor's name as
provided in Section 6, (ii) permission to use the past performance and
investment history of the Sub-Advisor as the same is applicable to the
Fund, provided counsel to the Trust determine that the use of such
information and the manner of presentation of such information is
legally permissible, (iii) access to the individual(s) responsible for
day-to-day management of the Fund for marketing conferences,
teleconferences and other activities involving the promotion of the
Fund, subject to the reasonable request of the Advisor, (iv) permission
to use biographical and historical data of the Sub-Advisor and
individual manager(s), and (v) with respect to clients whose names are
provided to the Advisor by the Sub-Advisor in writing prior to use,
permission to use the names of these clients, subject to any
restrictions
18
<PAGE> 21
imposed by clients on the use of such names or by the Investment
Advisors Act of 1940 and the rules adopted thereunder.
c. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in accordance with the
policies with respect thereto set forth in the Trust's registration
statements under the 1940 Act and the Securities Act of 1933, as such
registration statements may be in effect from time to time. In
connection with the placement of orders for the execution of portfolio
transactions, the Sub-Advisor will create and maintain all necessary
brokerage records of the Fund in accordance with all applicable laws,
rules and regulations, including but not limited to records required by
Section 31(a) of the 1940 Act. All records shall be the property of the
Trust and shall be available for inspection and use by the Securities
and Exchange Commission (the "SEC"), the Trust or any person retained
by the Trust. Where applicable, such records shall be maintained by the
Advisor for the periods and in the places required by Rule 31a-2 under
the 1940 Act. When placing orders with brokers and dealers, the
Sub-Advisor shall seek to obtain the most favorable price and execution
available for the Fund, and in placing such orders the Sub-Advisor may
consider a number of factors, including, without limitation, the
overall direct net economic result to the Fund (including commissions,
which may not be the lowest available but ordinarily should not be
higher than the generally prevailing competitive range), the financial
strength and stability of the broker, the efficiency with which the
transaction will be effected, the ability to effect the transaction at
all where a large block is involved and the availability of the broker
or dealer to stand ready to execute possibly difficult transactions in
the future. The Sub-Advisor is specifically authorized, to the extent
authorized by law (including, without limitation, Section 28(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to
pay a broker or dealer who provides research services to the
Sub-Advisor an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting such transaction, in
recognition of such additional research services rendered by the broker
or dealer, but only if the Sub-Advisor determines in good faith that
the excess commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer
viewed in terms of the particular transaction or the Sub-Advisor's
overall responsibilities with respect to discretionary accounts that it
manages, and that the Fund derives or will derive a reasonably
significant benefit from such research services. The Sub-Advisor will
present a written report to the Board of Trustees of the Trust, at
least quarterly and at such other times as reasonably requested by the
Board of Trustees, indicating total brokerage expenses, actual or
imputed, as well as the services obtained in consideration for such
expenses,
19
<PAGE> 22
broken down by broker-dealer and containing such information as the
Board of Trustees reasonably shall request.
d. The Sub-Advisor may execute standard account documentation,
agreements, contracts and other documents (collectively, the "Account
Documents") as the Sub-Advisor may be requested by brokers, dealers,
counterparties and other persons in connection with the Sub-Advisor's
management of the Fund Assets, provided that the Advisor and the
Trust's Board of Trustees first authorize the Sub-Advisor to execute
Account Documents. In such respect, and only for this limited purpose,
the Sub-Advisor shall act as the agent and/or attorney-in-fact of the
Trust and/or the Advisor.
e. The Advisor recognizes that, subject to the provisions of
Section 2c, Scudder Investor Services, Inc. or its successor ("SIS"),
an affiliate of the Sub-Advisor, may act as the regular broker for the
Fund so long as it is lawful for it so to act and that SIS may be a
major recipient of brokerage commissions paid by the Fund. SIS may
effect securities transactions for the Fund only if (i) the
commissions, fees or other remuneration received or to be received by
it are reasonable and fair compared to the commissions, fees or other
remuneration received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time and (ii) the
Trustees, including a majority of those Trustees who are not interested
persons, have adopted procedures pursuant to Rule 17e-1 under the 1940
Act for determining the permissible level of such commissions.
f. The Advisor understands that (i) when orders to purchase or
sell the same security on identical terms are placed by more than one
of the funds and/or other advisory accounts managed by the Sub-Advisor
or its affiliates, the transactions generally will be executed as
received, although a fund or advisory account that does not direct
trades to a specific broker ("free trades") usually will have its order
executed first, (ii) although all orders placed on behalf of the Fund
will be considered free trades, having an order placed first in the
market does not necessarily guarantee the most favorable price, and
(iii) purchases will be combined where possible for the purpose of
negotiating brokerage commissions, which in some cases might have a
detrimental effect on the price or volume of the security in a
particular transaction as far as the Fund is concerned.
g. The Sub-Advisor may enter into arrangements with other
persons affiliated with the Sub-Advisor for the provision of certain
personnel
20
<PAGE> 23
and facilities to the Sub-Advisor to better enable it to fulfill its
duties and obligations under this Agreement.
h. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than
30 days) after such reorganization or change.
i. The Sub-Advisor will bear its expenses of providing
services to the Fund pursuant to this Agreement except such expenses as
are undertaken by the Advisor or the Trust.
j. The Sub-Advisor will manage the Fund Assets and the
investment and reinvestment of such assets so as to seek to comply with
the provisions of the 1940 Act and with Subchapter M of the Internal
Revenue Code of 1986, as amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.50% of the
first $150 million of the average daily net assets of the Combined
Funds, and 0.45% of such average daily net assets in excess of $150
million.
b. "Combined Funds," for purposes of this Section 3, means the
combined assets of the Fund and the Touchstone Growth & Income Fund of
the Touchstone Variable Series Trust, to which the Sub-Advisor also
acts as an investment advisor.
c. The fee of the Sub-Advisor hereunder shall be computed and
accrued daily and paid monthly. If the Sub-Advisor serves in such
capacity for less than the whole of any period specified in this
Section 3a, the fee to the Sub-Advisor shall be prorated. For purposes
of calculating the Sub-Advisor's fee, the daily value of the Combined
Funds shall be computed by the same method as the Trust and the
Touchstone Variable Series Trust use, respectively, to compute the net
asset value of each such Fund for purposes of purchases and redemptions
of interests thereof.
d. The Sub-Advisor reserves the right to waive all or a part
of its fees hereunder.
21
<PAGE> 24
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the
Sub-Advisor may perform investment advisory services for various other clients,
including other investment companies. Furthermore, it is understood that the
Sub-Advisor may give advice, and take action, with respect to its other clients
that may differ from the advice given, or the time and nature of the action
taken, with respect to the Fund. The Sub-Advisor will report to the Board of
Trustees of the Trust (at regular quarterly meetings and at such other times as
such Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Sub-Advisor and affiliates of the
Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the performance of other comparable accounts to whom the Sub-Advisor provides
services and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. The Sub-Advisor
agrees, on an ongoing basis, to notify the Advisor of any change in the
individual(s) responsible for day-to-day management of the Fund and any material
change in the investment strategies employed by the Sub-Advisor in managing the
Fund. At least annually, the Sub-Advisor shall report to the Trustees the total
number and type of such other accounts and the approximate total asset value
thereof (but not the identities of the beneficial owners of such accounts). The
Sub-Advisor agrees to submit to the Trust a statement defining its policies with
respect to the allocation of investment opportunities among the Fund and its
other clients.
It is understood that the Sub-Advisor may become interested in the
Trust as an interest holder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
Nothing in this Agreement shall prevent the Sub-Advisor, any parent,
subsidiary or affiliate, or any director or officer thereof, from acting as
investment advisor for any other person, firm, or corporation, and shall not in
any way limit or restrict the Sub-Advisor or any of its directors, officers,
stockholders or employees from buying, selling or trading any securities or
commodities for its or their own account or for the account of others for whom
it or they may be acting, if such activities will not adversely affect or
otherwise impair the performance by the Sub-Advisor of its duties and
obligations under this Agreement. The Sub-Advisor will (i) supply to the
Advisor, upon the execution of this Agreement, with a true copy of its currently
effective Code of Ethics and policies regarding insider trading and
22
<PAGE> 25
(ii) thereafter supply to Advisor copies of any amendments to or restatements of
such Code of Ethics or insider trading policies. The Sub-Advisor agrees to
provide the Advisor, on a quarterly basis, a report with respect to material
violations of the Sub-Advisor's Code of Ethics or insider trading policies by
portfolio managers who have responsibility for managing the Fund or a written
statement indicating that no such violations have occurred during the quarter.
In addition, the Sub-Advisor agrees to provide to the Advisor such other
information concerning violations of its Code of Ethics or insider trading
policies to the same extent that it provides such information to the Boards of
Directors of its proprietary mutual funds. The parties agree to be bound by the
provisions of Rule 17j-1 under the 1940 Act as it may be amended to the extent
that the provisions of the Rule are stricter than the provisions of this
paragraph.
5. PROVISION OF INFORMATION BY THE ADVISOR. To facilitate the
Sub-Advisor's fulfillment of its obligations under this Agreement, the Advisor
agrees (i) promptly to provide the Sub-Advisor with all amendments or
supplements to the Trust's registration statements, its Agreement and
Declaration of Trust, and its By-Laws, (ii) on an ongoing basis, to notify the
Sub-Advisor expressly in writing of each change in the fundamental and
nonfundamental investment policies of the Fund, (iii) to provide or cause to be
provided to the Sub-Advisor on an ongoing basis such assistance as may
reasonably be requested by the Sub-Advisor in connection with its activities
under this Agreement, including, without limitation, information concerning the
Fund, its available funds, or funds that may reasonably become available for
investment, and information as to the general condition of the Fund's affairs,
(iv) to provide or cause to be provided to the Sub-Advisor on an ongoing basis
such information as is reasonably requested by the Sub-Advisor for performance
by the Sub-Advisor of its obligations under this Agreement and the Sub-Advisor
shall not be in breach of any term of this Agreement or be deemed to have acted
negligently if such alleged breach or negligent act is the result of the
Advisor's failure to provide or cause to be provided such requested information
and the Sub-Advisor's reliance on the information most recently furnished to the
Sub-Advisor, and (v) promptly to provide the Sub-Advisor with any guidelines and
procedures applicable to the Sub-Advisor or the Fund adopted from time to time
by the Board of Trustees of the Trust and all amendments thereto.
6. USE OF NAMES. Neither the Advisor nor the Trust shall use the
name of the Sub-Advisor in any prospectus, sales literature or other material
relating to the Advisor or the Trust in any manner not approved in advance by
the Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses
of its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case
23
<PAGE> 26
may be; provided, however, that the Advisor and the Trust shall each approve all
uses of their respective names which merely refer in accurate terms to the
appointment of the Sub-Advisor hereunder or which are required by the SEC or a
state securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld. Upon termination of this Agreement, the
Advisor and the Trust shall immediately cease to use the name of the
Sub-Advisor.
7. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any holder of an interest
in the Fund for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security. The Sub-Advisor shall not be liable
to the Advisor or the Trust for any loss suffered as a consequence of any action
or inaction of other service providers to the Trust, provided such action or
inaction of such other service providers to the Fund is not a result of the
willful misconduct, bad faith or gross negligence in the performance of, or
reckless disregard of, the duties of the Sub-Advisor under this Agreement. As
used in this Section 7, the term "Sub-Advisor" shall include the Sub-Advisor
and/or any of its affiliates and the directors, officers and employees of the
Sub-Advisor and/or any of its affiliates.
8. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges
that it has received notice of and accepts the limitations upon the Trust's
liability set forth in its Declaration of Trust. The Sub-Advisor agrees that (i)
the Trust's obligations to the Sub-Advisor under this Agreement (or indirectly
under the Advisory Agreement) shall be limited, in any event to the assets of
the Fund and (ii) the Sub-Advisor shall not seek satisfaction of any such
obligation from the holders of shares of the Fund nor from any Trustee, officer,
employee or agent of the Trust.
9. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays
or errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
10. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, until December 31, 1999; and it
shall continue thereafter provided that such continuance is
specifically approved by the parties and, in addition, at least
annually by (i) the vote of the holders
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<PAGE> 27
of a majority of the outstanding voting securities (as herein defined)
of the Fund or by vote of a majority of the Trust's Board of Trustees
and (ii) by the vote of a majority of the Trustees who are not parties
to this Agreement or interested persons of either the Advisor or the
Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the Fund, in any such case upon not less than 60 days'
prior written notice to the Sub-Advisor and (ii) by the Sub-Advisor
upon not less than 60 days' prior written notice to the Advisor and the
Trust. This Agreement shall terminate automatically in the event of its
assignment.
c. If this Agreement is not approved by the favorable vote of
a majority of the outstanding voting securities of the Fund during the
150-day period after the effective date of the Agreement, it will
terminate as of the close of business on the last day of such period.
d. This Agreement will also terminate upon written notice to
the other party that the other party is in material breach of this
Agreement, unless the other party in material breach of this Agreement
cures such breach to the reasonable satisfaction of the party alleging
the breach within 30 days after the written notice.
e. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Fund affected by
such change.
f. The terms "affiliated persons," "assignment," "interested
persons" and "majority of the outstanding voting securities" shall have
the meaning set forth for such terms in Section 2(a) of the 1940 Act.
11. SEVERABILITY AND INCORPORATED EFFECT. If any provision of this
Agreement shall become or shall be found to be invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is relaxed by a rule, regulation or
order of the SEC, whether of specific or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
12. NOTICE. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the
25
<PAGE> 28
other party at such address as such other party may designate in accordance with
this paragraph for the receipt of such notice. Until further notice to the other
party, it is agreed that the address of the Trust and that of the Advisor for
this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 345 Park Avenue, New York, New York 10154.
13. MISCELLANEOUS. Each party agrees to perform such further
actions and execute such further documents as are necessary to effectuate the
purposes hereof. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Ohio, or any applicable provisions
of the 1940 Act. To the extent that the laws of the State of Ohio, or any of the
provisions in the Agreement, conflict with applicable provisions of the 1940
Act, the latter shall control. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
Attest:
BY
- ------------------------------ ------------------------------
Edward G. Harness, Jr.
Name: President
-------------------------
Title:
------------------------
SCUDDER KEMPER INVESTMENTS, INC.
Attest:
BY
- ------------------------------ ------------------------------
Name: Name:
------------------------- -----------------------------
Title: Title:
------------------------ ----------------------------
26
<PAGE> 29
EXHIBIT A-2
COMPARISON OF JANUARY 1999 AGREEMENT
TO JANUARY 1998 AGREEMENT
Deletions appear as bracketed text
Additions appear as "bold" text
SUB-ADVISORY AGREEMENT
TOUCHSTONE GROWTH & INCOME FUND
TOUCHSTONE SERIES TRUST
[Portfolio Advisory Agreement
Select Advisors Portfolio
Growth & Income Portfolio
Growth & Income II Portfolio]
This [Portfolio] SUB-Advisory Agreement is made as of [the 1st day of
January, 1998] JANUARY 1, 1999, by and between Touchstone Advisors, Inc., an
Ohio corporation (the "Advisor"), and Scudder Kemper Investments, Inc., a
Delaware corporation [(the "Portfolio Advisor")] (THE "SUB-ADVISOR").
WHEREAS, the Advisor [has been organized to operate as] IS an
investment advisor registered under the Investment Advisers Act of 1940, as
amended [(the "Advisers Act")], and has been retained by TOUCHSTONE SERIES TRUST
(FORMERLY Select Advisors [Portfolios] TRUST A) (the "Trust"), a [New York]
MASSACHUSETTS BUSINESS trust organized pursuant to a Declaration of Trust dated
February 7, 1994 and registered as an open-end DIVERSIFIED management investment
company under the Investment Company Act of 1940 (the "1940 Act") to provide
investment advisory services to the [Growth & Income Portfolio and the Growth
and Income II Portfolio (herein together the "Portfolio")] TOUCHSTONE GROWTH &
INCOME FUND (THE "FUND"); and
WHEREAS, the [Portfolio] SUB-Advisor also is an investment advisor
registered under the INVESTMENT Advisers Act OF 1940, AS AMENDED; and
WHEREAS, the Advisor desires to retain the [Portfolio] SUB-Advisor to
furnish it with portfolio management services in connection with the Advisor's
investment advisory activities on behalf of the [Portfolio] FUND, and the
[Portfolio] SUB-Advisor is willing to furnish such services to the Advisor and
the [Portfolio] FUND;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of the [Portfolio] SUB-Advisor. In accordance with
and subject to the Investment Advisory Agreement between the Trust and the
Advisor, attached hereto as Exhibit A (the "Advisory Agreement"), the Advisor
hereby appoints the [Portfolio] SUB-Advisor to manage the investment and
reinvestment of those assets of the [Portfolio] FUND allocated to it by the
Advisor (the "[Portfolio] FUND Assets"), subject to the control and direction of
the Advisor and the Trust's Board of Trustees, for the period and on the terms
hereinafter set forth. The Advisor hereby represents that (i) it has authority
under the Advisory Agreement to appoint the [Portfolio] SUB-Advisor to act as an
investment [adviser] ADVISOR to the Trust, and (ii) this Agreement is valid and
binding upon the Advisor. The [Portfolio] SUB-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The [Portfolio] SUB-Advisor shall at all times maintain its registration as an
investment advisor under the INVESTMENT Advisers Act OF 1940 and shall otherwise
comply in all material respects with all applicable laws and regulations, both
state and federal. The [Portfolio] SUB-Advisor shall for all purposes herein be
deemed an independent contractor and shall, except as expressly provided or
authorized (whether herein or otherwise), have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust or
the [Portfolio] FUND.
2. Duties of the [Portfolio] SUB-Advisor. The [Portfolio]
SUB-Advisor will
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<PAGE> 30
provide the following services and undertake the following duties:
a. The [Portfolio] SUB-Advisor will manage the investment and
reinvestment of the [Portfolio Assets] ASSETS OF THE FUND, subject to
and in accordance with the investment objectives, policies and
restrictions of the [Portfolio] FUND and any directions which the
Advisor or the Trust's Board of Trustees may give from time to time
with respect to the [Portfolio] FUND. In furtherance of the foregoing,
the [Portfolio] SUB-Advisor will make all determinations with respect
to the investment of the [Portfolio Assets] ASSETS OF THE FUND and the
purchase and sale of portfolio securities and shall take such steps as
may be necessary or advisable to implement the same. The [Portfolio]
SUB-Advisor also will determine the manner in which voting rights,
rights to consent to corporate action and any other rights pertaining
to the portfolio securities will be exercised. The [Portfolio]
SUB-Advisor will render regular reports to the Trust's Board of
Trustees, to the Advisor and to BARRA 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] SUB-Advisor). Such reports shall be made in such form and
manner and with respect to such matters regarding the [Portfolio] FUND
and the [Portfolio] SUB-Advisor as the Trust, the Advisor or BARRA
RogersCasey [Consulting], Inc. shall from time to time reasonably
request.
b. The [Portfolio] SUB-Advisor shall provide support to the
Advisor with respect to the marketing of the [Portfolio] FUND in a
manner comparable to the support provided to comparable clients of the
[Portfolio] SUB-Advisor, including but not limited to: (i) permission
to use the [Portfolio] SUB-Advisor's name as provided in Section 6,
(ii) permission to use the past performance and investment history of
the [Portfolio] SUB-Advisor as the same is applicable to the
[Portfolio] FUND, provided counsel to the Trust determine that the use
of such information and the manner of presentation of such information
is legally permissible, (iii) access to the individual(s) responsible
for day-to-day management of the [Portfolio] FUND for marketing
conferences, teleconferences and other activities involving the
promotion of the [Portfolio] FUND, subject to the reasonable request of
the Advisor, (iv) permission to use biographical and historical data of
the [Portfolio] SUB-Advisor and individual manager(s), and (v) with
respect to clients whose names are provided to the Advisor by the
[Portfolio] SUB-Advisor in writing prior to use, permission to use the
names of these clients, subject to any restrictions imposed by [these]
clients on the use of such names or by the [Advisers] INVESTMENT
ADVISORS Act OF 1940 and the rules adopted thereunder.
c. The [Portfolio] SUB-Advisor will, in the name of the
[Portfolio] FUND, place orders for the execution of all portfolio
transactions in accordance with the policies with respect thereto set
forth in the Trust's registration statements under the 1940 Act and the
Securities Act of 1933, as such registration statements may be in
effect from time to time. In connection with the placement of orders
for the execution of portfolio transactions, the [Portfolio]
SUB-Advisor will create and maintain all necessary brokerage records of
the [Portfolio] FUND in accordance with all applicable laws, rules and
regulations, including but not limited to records required by Section
31(a) of the 1940 Act. All records shall be the property of the Trust
and shall be available for inspection and use by the Securities and
Exchange Commission (the "SEC"), the Trust or any person retained by
the Trust. Where applicable, such records shall be maintained by the
Advisor for the periods and in the places required by Rule 31a-2 under
the 1940 Act. When placing orders with brokers and dealers, the
[Portfolio] SUB-Advisor shall seek to obtain the most favorable price
and execution available for the [Portfolio] FUND, and in placing such
orders the [Portfolio] SUB-Advisor may consider a number of factors,
including, without limitation, the overall direct net economic result
to the [Portfolio] FUND (including commissions, which may not be the
lowest available
28
<PAGE> 31
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]
SUB-Advisor is specifically authorized, to the extent authorized by law
(including, without limitation, Section 28(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), to pay a broker
or dealer who provides research services to the [Portfolio] SUB-Advisor
an amount of commission for effecting a portfolio transaction in excess
of the amount of commission another broker or dealer would have charged
for effecting such transaction, in recognition of such additional
research services rendered by the broker or dealer, but only if the
[Portfolio] SUB-Advisor determines in good faith that the excess
commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer viewed in terms of
the particular transaction or the [Portfolio] SUB-Advisor's overall
responsibilities with respect to discretionary accounts that it
manages, and that the [Portfolio] FUND derives or will derive a
reasonably significant benefit from such research services. The
[Portfolio] SUB-Advisor will present a written report to the Board of
Trustees of the Trust, at least quarterly and at such other times as
reasonably requested by the Board of Trustees, indicating total
brokerage expenses, actual or imputed, as well as the services obtained
in consideration for such expenses, broken down by broker-dealer and
containing such information as the Board of Trustees reasonably shall
request.
d. The [Portfolio] SUB-Advisor may execute standard account
documentation, agreements, contracts and other documents (collectively,
THE "Account Documents") as the [Portfolio] SUB-Advisor may be
requested by brokers, dealers, counterparties and other persons in
connection with the [Portfolio] SUB-Advisor's management of the
[Portfolio] FUND Assets, provided that the Advisor and the Trust's
Board of Trustees first authorize the [Portfolio] SUB-Advisor to
execute Account Documents. In such respect, and only for this limited
purpose, the [Portfolio] SUB-Advisor shall act as the agent and/or
attorney-in-fact of the Trust and/or the Advisor.
e. The Advisor recognizes that, subject to the provisions of
Section 2c, Scudder Investor Services, Inc. or its successor ("SIS"),
an affiliate of the [Portfolio] SUB-Advisor, may act as the regular
broker for the [portfolio] FUND so long as it is lawful for it so to
act and that SIS may be a major recipient of brokerage commissions paid
by the [portfolio] FUND. SIS may effect securities transactions for the
[portfolio] FUND only if (i) the commissions, fees or other
remuneration received or to be received by it are reasonable and fair
compared to the commissions, fees or other remuneration received by
other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange
during a comparable period of time and (ii) the Trustees, including a
majority of those Trustees who are not interested persons, have adopted
procedures pursuant to Rule 17e-1 under the 1940 Act for determining
the permissible level of such commissions.
f. The Advisor understands that (i) when orders to purchase or
sell the same security on identical terms are placed by more than one
of the funds and/or other advisory accounts managed by the [Portfolio]
SUB-Advisor or its affiliates, the transactions generally will be
executed as received, although a fund or advisory account that does not
direct trades to a specific broker ("free trades") usually will have
its order executed first, (ii) although all orders placed on behalf of
the [Portfolio] FUND will be considered free trades, having an order
placed first in the market does not necessarily guarantee the most
favorable price, and (iii) purchases will be combined where possible
for the purpose of negotiating brokerage commissions, which in some
cases might have a detrimental effect on the price or volume of the
security in a particular transaction as far as the [Portfolio] FUND is
concerned.
g. The [Portfolio] SUB-Advisor may enter into arrangements
with other persons affiliated with the [Portfolio] SUB-Advisor for the
provision of certain personnel and facilities to the [Portfolio]
SUB-Advisor to better enable it to fulfill its duties and obligations
under this Agreement.
h. In the event of any reorganization or other change in the
[Portfolio] SUB-Advisor, its investment principals, supervisors or
members of its investment (or comparable) committee, the [Portfolio]
SUB-Advisor shall give the Advisor and the Trust's Board of Trustees
written notice of such reorganization or change within a reasonable
time (but not later than 30 days) after such reorganization or
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<PAGE> 32
change.
i. The [Portfolio] SUB-Advisor will bear its expenses of
providing services to the [Portfolio] FUND pursuant to this Agreement
except such expenses as are undertaken by the Advisor or the Trust.
j. The [Portfolio] SUB-Advisor will manage the [Portfolio]
FUND Assets and the investment and reinvestment of such assets so as to
seek to comply with the provisions of the 1940 Act and with Subchapter
M of the Internal Revenue Code of 1986, as amended.
3. Compensation of the [Portfolio] SUB-Advisor.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the [Portfolio] SUB-Advisor, the Advisor will
pay to the [Portfolio] SUB-Advisor a monthly fee equal on an annual
basis to 0.50% of the first $150 million of the average daily net
assets of the [Portfolio] COMBINED FUNDS, and 0.45% of such average
daily net assets in excess of $150 million.
b. "COMBINED FUNDS," FOR PURPOSES OF THIS SECTION 3, MEANS THE
COMBINED ASSETS OF THE FUND AND THE TOUCHSTONE GROWTH & INCOME FUND OF
THE TOUCHSTONE VARIABLE SERIES TRUST, TO WHICH THE SUB-ADVISOR ALSO
ACTS AS AN INVESTMENT ADVISOR.
[b]C. The fee of the [Portfolio] SUB-Advisor hereunder shall
be computed and accrued daily and paid monthly. If the [Portfolio]
SUB-Advisor serves in such capacity for less than the whole of any
period specified in THIS Section 3a, the fee to the [Portfolio]
SUB-Advisor shall be prorated. For purposes of calculating the
[Portfolio] SUB-Advisor's fee, the daily value of the [Portfolios net
assets] COMBINED FUNDS shall be computed by the same method as the
Trust [uses] AND THE TOUCHSTONE VARIABLE SERIES TRUST USE,
RESPECTIVELY, to compute the net asset value of [the Portfolio] EACH
SUCH FUND for purposes of purchases and redemptions of interests
thereof.
[c]D. The [Portfolio] SUB-Advisor reserves the right to waive
all or a part of its fees hereunder.
4. Activities of the [Portfolio] SUB-Advisor. It is understood
that the [Portfolio] SUB-Advisor may perform investment advisory services for
various other clients, including other investment companies. Furthermore, it is
understood that the [Portfolio] SUB-Advisor may give advice, and take action,
with respect to its other clients that may differ from the advice given, or the
time and nature of THE action taken, with respect to the [Portfolio] FUND. The
[Portfolio] SUB-Advisor will report to the Board of Trustees of the Trust (at
regular quarterly meetings and at such other times as such Board of Trustees
reasonably shall request) (i) the financial condition and prospects of the
[Portfolio] SUB-Advisor, (ii) the nature and amount of transactions affecting
the [Portfolio] FUND that involve the [Portfolio] SUB-Advisor and affiliates of
the [Portfolio] SUB-Advisor, (iii) information regarding any potential conflicts
of interest arising by reason of its continuing provision of advisory services
to the [Portfolio] FUND and to its other accounts, and (iv) such other
information as the Board of Trustees shall reasonably request regarding the
[Portfolio] FUND, the [Portfolio's] FUND'S performance, the performance of other
comparable accounts to whom the [Portfolio] SUB-Advisor provides services, and
the plans of, and the capability of, the [Portfolio] SUB-Advisor with respect to
providing future services to the [Portfolio] FUND and its other accounts. The
[Portfolio] SUB-Advisor agrees, on an ongoing basis, to notify the Advisor of
any change in the individual(s) responsible for day-to-day management of the
[Portfolio] FUND and any material change in the investment strategies employed
by the [Portfolio] SUB-Advisor in managing the [Portfolio] FUND. At least
annually, the [Portfolio] SUB-Advisor shall report to the Trustees the total
number and type of such other
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<PAGE> 33
accounts and the approximate total asset value thereof (but not the identities
of the beneficial owners of such accounts). The [Portfolio] SUB-Advisor agrees
to submit to the Trust a statement defining its policies with respect to the
allocation of investment opportunities among the [Portfolio] FUND and its other
clients.
It is understood that the [Portfolio] SUB-Advisor may become interested
in the Trust as an interest holder or otherwise.
The [Portfolio] SUB-Advisor has supplied to the Advisor and the Trust
copies of its Form ADV with all exhibits and attachments thereto (including the
[Portfolio] SUB-Advisor's statement of financial condition) and will hereafter
supply to the Advisor, promptly upon the preparation thereof, copies of all
amendments or restatements of such document.
Nothing in this Agreement shall prevent the [Portfolio] SUB-Advisor,
any parent, subsidiary or affiliate, or any director or officer thereof, from
acting as investment advisor for any other person, firm, or corporation, and
shall not in any way limit or restrict the [Portfolio] SUB-Advisor or any of its
directors, officers, stockholders or employees from buying, selling or trading
any securities or commodities for its or their own account or for the account of
others for whom it or they may be acting, if such activities will not adversely
affect or otherwise impair the performance by the [Portfolio] SUB-Advisor of its
duties and obligations under this Agreement. The [Portfolio] SUB-Advisor will
(i) supply to the Advisor, upon the execution of this Agreement, with a true
copy of its currently effective Code of Ethics and policies regarding insider
trading and (ii) thereafter supply to Advisor copies of any amendments to or
restatements of such Code of Ethics or insider trading policies. The [Portfolio]
SUB-Advisor agrees to provide the Advisor, on a quarterly basis, a report with
respect to material violations of the [Portfolio] SUB-Advisor's Code of Ethics
or insider trading policies by portfolio managers who have responsibility for
managing the [Portfolio] FUND or a written statement indicating that no such
violations have occurred during the quarter. In addition, the [Portfolio]
SUB-Advisor agrees to provide to the Advisor SUCH other information concerning
violations of its Code of Ethics or insider trading policies to the same extent
[as] THAT it provides such information to the Boards of Directors of its
proprietary mutual funds. The parties agree to be bound by the provisions of
Rule 17j-1 under the 1940 Act as it may be amended to the extent that the
provisions of the Rule are stricter than the provisions of this paragraph.
5. Provision of Information by the Advisor. To facilitate the
[Portfolio Advisors] SUB-ADVISOR'S fulfillment of its obligations under this
Agreement, the Advisor agrees (i) promptly to provide the [Portfolio]
SUB-Advisor with all amendments or supplements to the Trust's registration
statements, its Agreement and Declaration of Trust, and its By-Laws, (ii) on an
ongoing basis, to notify the [Portfolio] SUB-Advisor expressly in writing of
each change in the fundamental and nonfundamental investment policies of the
[Portfolio] FUND, (iii) to provide or cause to be provided to the [Portfolio]
SUB-Advisor on an ongoing basis such assistance as may be reasonably BE
requested by the [Portfolio] SUB-Advisor in connection with its activities under
this Agreement, including, without limitation, information concerning the
[Portfolio] FUND, its available funds, or funds that may reasonably become
available for investment, and information as to the general condition of the
Portfolios FUND'S affairs, (iv) to provide or cause to be provided to the
[Portfolio] SUB-Advisor on an ongoing basis such information as is reasonably
requested by the [Portfolio] SUB-Advisor for performance by the [Portfolio]
SUB-Advisor of its obligations under this Agreement and the [Portfolio]
SUB-Advisor shall not be in breach of any term of this Agreement or be deemed to
have acted negligently if such alleged breach or negligent act is the result of
the Advisor's failure to provide or cause to be provided such requested
information and the [Portfolio] SUB-Advisor's reliance on the information most
recently furnished to the [Portfolio] SUB-Advisor, and (v) promptly to provide
the [Portfolio] SUB-Advisor with any guidelines and procedures applicable to the
[Portfolio] SUB-Advisor or the [Portfolio] FUND adopted from time to time by the
Board of Trustees of the Trust and all amendments thereto.
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<PAGE> 34
6. Use of Names. Neither the Advisor nor the Trust shall use the
name of the [Portfolio] SUB-Advisor in any prospectus, sales literature or other
material relating to the Advisor or the Trust in any manner not approved in
advance by the [Portfolio] SUB-Advisor; provided, however, that the [Portfolio]
SUB-Advisor will approve all uses of its name which merely refer in accurate
terms to its appointment hereunder or which are required by the SEC or a state
securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The [Portfolio] SUB-Advisor shall not use the
name of the Advisor or the Trust in any material relating to the [Portfolio]
SUB-Advisor in any manner not approved in advance by the Advisor or the Trust,
as the case may be; provided, however, that the Advisor and the Trust shall each
approve all uses of their respective names which merely refer in accurate terms
to the appointment of the [Portfolio] SUB-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld. Upon termination
of this Agreement, the Advisor and the Trust shall immediately cease to use the
name of the [Portfolio] SUB-Advisor.
7. Limitation of Liability of the [Portfolio] SUB-Advisor. Absent
willful misfeasance, bad faith, gross negligence, or reckless disregard of
obligations or duties hereunder on the part of the [Portfolio] SUB-Advisor, the
[Portfolio] SUB-Advisor shall not be subject to liability to the Advisor, the
Trust or to any holder of an interest in the [Portfolio] FUND for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security. The [Portfolio] SUB-Advisor shall not be liable to the Advisor or the
Trust for any loss suffered as a consequence of any action or inaction of other
service providers to the Trust, provided such action or inaction of such other
service providers to the [Portfolio] FUND is not a result of the willful
misconduct, bad faith or gross negligence in the performance of, or [from]
reckless disregard of, the duties of the [Portfolio] SUB-Advisor under this
Agreement. As used in this Section 7, the term "[Portfolio] SUB-Advisor" shall
include the [Portfolio] SUB-Advisor and/or any of its affiliates and the
directors, officers and employees of the [Portfolio] SUB-Advisor and/or any of
its affiliates.
8. Limitation of Trust's Liability. The [Portfolio] SUB-Advisor
acknowledges that it has received notice of and accepts the limitations upon the
Trust's liability set forth in its Declaration of Trust. The [Portfolio]
SUB-Advisor agrees that (i) the Trust's obligations to the [Portfolio]
SUB-Advisor under this Agreement (or indirectly under the Advisory Agreement)
shall be limited, in any event to the assets of the [Portfolio] FUND and (ii)
the [Portfolio] SUB-Advisor shall not seek satisfaction of any such obligation
from the holders of [interests in] SHARES OF the [Portfolio] FUND nor from any
Trustee, officer, employee or agent of the Trust.
9. Force Majeure. The [Portfolio] SUB-Advisor shall not be liable
for delays or errors occurring by reason of circumstances beyond its control,
including but not limited to acts of civil or military authority, national
emergencies, work stoppages, fire, flood, catastrophe, acts of God,
insurrection, war, riot, or failure of communication or power supply. In the
event of equipment breakdowns beyond its control, the [Portfolio] SUB-Advisor
shall take reasonable steps to minimize service interruptions but shall have no
liability with respect thereto.
10. Renewal, Termination and Amendment.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, until December 31, [1998] 1999; and
it shall continue thereafter provided that such continuance is
specifically approved by the parties and, in addition, at least
annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the [Portfolio]
FUND or by vote of a majority of the Trust's Board of Trustees and (ii)
by the vote of a majority of the Trustees who are not parties to this
Agreement or interested
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<PAGE> 35
persons of either the Advisor or the [Portfolio] SUB-Advisor, cast in
person at a meeting called for the purpose of voting on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the [Portfolio] FUND, in any such case upon not less than
60 days' prior written notice to the [Portfolio] SUB-Advisor and (ii)
by the [Portfolio] SUB-Advisor upon not less than 60 days' prior
written notice to the Advisor and the Trust. This Agreement shall
terminate automatically in the event of its assignment.
c. IF THIS AGREEMENT IS NOT APPROVED BY THE FAVORABLE VOTE OF
A MAJORITY OF THE OUTSTANDING VOTING SECURITIES OF THE FUND DURING THE
150-DAY PERIOD AFTER THE EFFECTIVE DATE OF THE AGREEMENT, IT WILL
TERMINATE AS OF THE CLOSE OF BUSINESS ON THE LAST DAY OF SUCH PERIOD.
[c]D. This Agreement will also terminate upon written notice
to the other party that the other party is in material breach of [the]
THIS Agreement, unless the other party in material breach of this
Agreement cures such breach to the reasonable satisfaction of the party
alleging the breach within 30 days after the written notice.
[d]E. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the [Portfolio] FUND
affected by such change.
[e]F. The terms "affiliated persons," "assignment,"
"interested persons" and "majority of the outstanding voting
securities" shall have the meaning set forth for such terms in Section
2(a) of the 1940 Act.
11. Severability and Incorporated Effect. If any provision of this
Agreement shall become or shall be found to be invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is relaxed by a rule, regulation or
order of the SEC, whether of specific or general application, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
12. Notice. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the other party at such address as such other party may designate in accordance
with this paragraph for the receipt of such notice. Until further notice to the
other party, 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] SUB-Advisor shall be 345 Park Avenue, New York, New
York 10154.
13. Miscellaneous. Each party agrees to perform such further
actions and execute such further documents as are necessary to effectuate the
purposes hereof. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Ohio, or any applicable provisions
of the 1940 Act. To the extent that the laws of the State of Ohio, or any of the
provisions in the Agreement, conflict with applicable provisions of the 1940
Act, the latter shall control. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
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<PAGE> 36
Touchstone Advisors, Inc.
Attest:
BY
Edward G. Harness, Jr.
Name: President
Title:
Scudder Kemper Investments, Inc.
Attest:
BY
Name: Name:
Title: Title:
34
<PAGE> 37
EXHIBIT B
The following table contains information about other registered
investment companies or separate portfolios of other registered investment
companies that are advised by Scudder Kemper and have an investment objective
similar to the Fund's investment objective. Information is shown as of the end
of each fund's last fiscal year, except net asset information for Kemper U.S.
Growth and Income Fund is shown as of the semi-annual period ended April 30,
1998.
<TABLE>
<CAPTION>
FUND OBJECTIVE FEE RATE NET ASSETS
<S> <C> <C> <C>
Scudder Variable Life Long term growth of capital, 0.475% of net assets $ 163,603,606
Investment Fund Growth current income and growth of
And Income Portfolio income from a portfolio
consisting primarily of common
stocks and securities
convertible into common stocks.
AARP Growth and Income Long term capital growth and 0.350% to $2 billion $6,606,012,897
Fund income, consistent with a share 0.330% next $2 billion
price more stable than other 0.300% next $2 billion
growth and income mutual funds, 0.280% next $2 billion
through investment primarily in 0.260% next $3 billion
common stocks with above-average 0.250% next $3 billion
dividend yields and securities 0.240% thereafter
convertible into common stocks. INDIVIDUAL FUND FEE
1.190% of net assets
Kemper Blue Chip Fund Growth of capital and income 0.580% to $250 million $ 446,891,000
0.550% next $750 million
0.530% next $1.5 billion
0.510% next $2.5 billion
0.480% next $2.5 billion
0.460% next $2.5 billion
0.440% next $2.5 billion
0.420% thereafter
Kemper U.S. Growth and Long-term growth of capital, 0.600% to $250 million $ 3,864,000
Income Fund current income and growth of 0.570% next $750 million
income. 0.550% next $1.5 billion
0.530% thereafter
Touchstone Growth and Long-term capital appreciation 0.50% to $150 million $____________
Income Fund of and dividend income through 0.45% thereafter
Touchstone Series investment primarily in common (based on the combined net
Variable Trust (the stocks of high quality. assets of the Touchstone
("Touchstone Insurance Insurance Fund and the Fund)
Fund")
</TABLE>
19
<PAGE> 38
TOUCHSTONE GROWTH & INCOME FUND
(a series of Touchstone Series Trust)
The undersigned appoints Edward G. Harness, Jr., David Dennison and
Andrew S. Josef 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 the Shareholders of
the Touchstone Growth & Income Fund, a separate series of the Touchstone Series
Trust, to be held at 10:00 a.m. on January 28, 1999, at the offices of the
Trust, 311 Pike Street, Cincinnati, Ohio, and at any adjournment thereof.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE TRUST. 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. AS TO ANY OTHER
MATTER, ALL PROXIES WILL BE VOTED IN THE DISCRETION OF THE PROXY HOLDERS.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE FOR THE PROPOSAL.
Please vote by checking your response.
To approve or disapprove a new sub-advisory FOR AGAINST ABSTAIN
agreement between Touchstone Advisors, Inc. [ ] [ ] [ ]
and Scudder Kemper Investments, Inc.
Total shares attributable to the undersigned: _________________
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN EXACTLY AS Note: The undersigned hereby
YOUR NAME APPEARS BELOW, AND RETURN acknowledges receipt of the notice
THIS FORM IN THE ENCLOSED of meeting and proxy statement and
SELF-ADDRESSED ENVELOPE. revokes any proxy heretofore given
with respect to the votes covered by
this proxy.
Dated: ___________________, 1999
---------------------------------
Signature
---------------------------------
Signature If Jointly Held
