TOUCHSTONE BALANCED 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 of shareholders of
Touchstone Balanced Fund, a separate series of Touchstone Series Trust, will be
held on February 21, 2000 at 10:00 a.m., Eastern 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 between
Touchstone Advisors, Inc. and OpCap Advisors pursuant to which
OpCap Advisors will act as sub-advisor with respect to the assets
of the Touchstone Balanced Fund.
(2) To transact such other business as may properly come before the
special meeting or any adjournments thereof.
Shareholders of record at the close of business on December 24, 1999
are entitled to notice of, and to vote at, the special meeting. The accompanying
Proxy Statement contains more information about the special meeting.
Whether you plan to attend the special 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
special meeting, you may change your vote, if desired, at that time.
This proxy statement is first being mailed to shareholders on or about
January 3, 2000.
By order of the Board of Trustees of the Touchstone Series Trust.
Cynthia Surprise
Secretary
Cincinnati, Ohio
January 3, 2000
<PAGE>
TOUCHSTONE BALANCED 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 to the
Class A and Class C shareholders of its Touchstone Balanced Fund on behalf of
the Trust's Board of Trustees in connection with the Trust's solicitation of the
accompanying proxy. This proxy will be voted at a special meeting of
shareholders to be held on February 21, 2000 at 10:00 a.m., Eastern 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 3, 2000.
At the meeting, shareholders will be asked to consider and vote upon
the following:
(1) To approve or disapprove a new sub-advisory agreement between
Touchstone Advisors, Inc. and OpCap Advisors pursuant to which
OpCap Advisors 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 December 24,
1999 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) of the Fund is required to approve the New 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.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE THE NEW AGREEMENT.
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 by calling (800) 669-2796
(press 3) or by writing to the Trust, 311 Pike Street, Cincinnati, Ohio 45202.
<PAGE>
TABLE OF CONTENTS
INTRODUCTION.............................................................1
TRUSTEES'EVALUATION OF THE NEW AGREEMENT.................................1
DESCRIPTION OF THE NEW AGREEMENT.........................................3
INFORMATION ABOUT OPCAP ADVISORS.........................................5
INFORMATION ABOUT THE TRANSACTION........................................6
VOTING AND SHARE OWNERSHIP...............................................9
GENERAL INFORMATION.....................................................11
<PAGE>
TOUCHSTONE BALANCED FUND
(a series of Touchstone Series Trust)
PROXY STATEMENT
INTRODUCTION
The Fund's investment advisor is Touchstone Advisors, Inc. Touchstone
Advisors, on behalf of the Fund, engages a sub-advisor to manage the investments
of the Fund. OpCap Advisors currently serves as the Fund's sub-advisor. The
meeting has been called for the purpose of considering a new sub-advisory
agreement (the "New Agreement") between Touchstone Advisors, on behalf of the
Fund, and OpCap Advisors. OpCap Advisors is an indirect subsidiary of PIMCO
Advisors, L.P.
On October 31, 1999, PIMCO Advisors L.P., its two general partners,
certain of their affiliates, Allianz of America, Inc. and certain other parties
entered into an Implementation and Merger Agreement (the "Merger Agreement")
pursuant to which Allianz of America will acquire majority ownership of PIMCO
Advisors. As a result of the transactions contemplated by the Merger Agreement
(together, the "Transaction"), Allianz of America will control PIMCO Advisors,
beneficially owning approximately 69% of PIMCO Advisors. The Transaction is
expected to be completed by the end of the first quarter of 2000, although there
is no assurance that the Transaction will be completed.
OpCap Advisors will undergo a change of control as a result of the
consummation of the Transaction, resulting in the automatic termination of its
current sub-advisory agreement with the Fund (the "1999 Agreement"). Following
completion of the Transaction, it is expected that OpCap Advisors will continue
to serve as the sub-advisor of the Fund. Therefore, in connection with the
Transaction and as required by the Investment Company Act of 1940, as amended,
shareholders of the Fund are being asked to approve the New Agreement. The New
Agreement is identical to the 1999 Agreement except for the effective date and
the termination date.
If the Transaction is not completed for any reason, the 1999 Agreement
will remain in effect. If the Transaction is completed but the shareholders of
the Fund do not approve the New Agreement, the Board will consider appropriate
action.
TRUSTEES' EVALUATION OF THE NEW AGREEMENT
On December 16, 1999, the Board of Trustees, including the Independent
Trustees, approved the New Agreement. For purposes of this approval, an
Independent Trustee was a Trustee who is not be a party to the New Agreement and
who is not an "interested person" (as defined in the Investment Company Act of
1940, as amended) of the Fund, the Trust, Touchstone Advisors or OpCap Advisors.
<PAGE>
In connection with the Board's consideration of the New Agreement,
OpCap Advisors furnished the Board of Trustees with information about the
Transaction. This information included the following documents:
o Acquisition of PIMCO Advisors L.P. by Allianz of America, Inc.:
Confidential Board Summary
o Press Release: Allianz AG to Purchase PIMCO Advisors Holdings L.P. for
$38.75 per Unit
o Analyst Report: Acquisition of PIMCO, Munich, November 1st, 1999
o A financial overview of Allianz Group from its 1998 Annual Report
o A memorandum discussing possible restrictions on fund complexes that
include funds for which a PIMCO affiliate (OpCap Advisors) serves as
the sub-advisor in connection with the funds' dealings with certain
broker-dealers
The Trustees also relied on representations by OpCap Advisors that the
same personnel would continue to provide advisory services to the Fund.
Furthermore, the Board of Trustees considered the commitment of OpCap Advisors
to pay for or reimburse the Trust and its affiliates for expenses incurred in
connection with the meeting of Fund shareholders.
In evaluating the New Agreement, the Board of Trustees also considered
the following factors, including:
o the nature, quality and extent of the services furnished by OpCap
Advisors, including its experience and investment record and its
investment philosophy and process,
o comparative data as to investment performance and advisory fees, and
o the advantages and possible disadvantages to the Fund of having a
sub-adviser that also serves other investment companies as well as
other accounts.
The Trustees also considered that the compensation payable to OpCap
Advisors by Touchstone Advisors under the New Agreement will be payable at the
same rate as the compensation payable by Touchstone Advisors to OpCap Advisors
under the 1999 Agreement and that the terms of the New Agreement are
substantially unchanged from the 1999 Agreement. Accordingly, the Board of
Trustees concluded that the Fund would receive investment advisory services
under the New Agreement that were equal to those it received under the 1999
Agreement, at the same fee levels.
The Board of Trustees believes that the terms of the New Agreement are
fair to, and in the best interest of, the Fund and its shareholders and
recommends that the shareholders approve the New Agreement.
2
<PAGE>
DESCRIPTION OF THE NEW AGREEMENT
COPIES OF THE NEW AGREEMENT
A copy of the New Agreement is attached to this Proxy Statement as
Exhibit A, and the description set forth in this Proxy Statement of the New
Agreement is qualified in its entirety by reference to Exhibit A. The copy is
marked to show differences between the 1999 Agreement and the New Agreement.
All of the terms and provisions of the New Agreement are identical to
those of the 1999 Agreement except for the effective date and the termination
date.
TERMS OF THE NEW AGREEMENT
Fee Arrangements. Under the New Agreement, OpCap Advisors is entitled
to receive from Touchstone Advisors a monthly fee on an annual basis equal to
0.60% of the first $20 million of the combined average daily net assets of the
Fund and another similar fund in the Touchstone complex (whose assets are also
managed by OpCap Advisors), 0.50% of the next $30 million of average daily net
assets of both funds, and 0.40% of the combined average daily net assets of both
funds in excess of $50 million.
THE FEE ARRANGEMENT IN THE NEW AGREEMENT IS IDENTICAL TO THE FEE
ARRANGEMENT CONTAINED IN THE 1999 AGREEMENT.
For the fiscal year ended December 31, 1998, Touchstone Advisors paid
OpCap Advisors $38,730 for its services to the Fund. For the 11 months ended
November 30, 1999, Touchstone Advisors paid OpCap Advisors $36,889 for its
services to the Fund. At November 30, 1999, the net assets of the Fund were
approximately $7,112,557.
Exhibit B contains information about other registered investment
companies or separate portfolios of other registered investment companies that
are advised by OpCap Advisors and have an investment objective similar to the
Fund's investment objective.
Responsibilities of OpCap Advisors. Under the New Agreement, OpCap
Advisors will provide certain investment advisory services to the Fund,
including deciding what securities will be purchased and sold by 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 Investment Company Act of
1940, as amended (the "1940 Act") and any rules thereunder, the governing
documents of the Trust, the fundamental policies of the Trust and the Fund, any
directions that Touchstone Advisors 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, OpCap Advisors 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.
OpCap Advisors will provide, at its expense, all necessary investment
and management facilities, including salaries of personnel required for it to
execute its duties, and administrative
3
<PAGE>
facilities, including clerical personnel and equipment necessary for it to
manage the portfolio of the Fund efficiently (excluding pricing and bookkeeping
services). OpCap Advisors is not obligated to pay any expenses for the Fund that
are not expressly assumed.
The New Agreement provides that OpCap Advisors will have no liability
to the Trust, to any shareholders of the Fund, or to Touchstone Advisors for any
act or omission in the course of, or in connection with, rendering services
under the New Agreement, except for liability resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard on the part of
OpCap Advisors in the performance of its duties under the New Agreement.
Continuance of New Agreement. If the New Agreement is approved at the
meeting, it will continue in effect until December 31, 2000. The New Agreement
will continue in effect thereafter for successive annual periods, if its
continuance is specifically approved at least annually:
(1) by a majority vote, cast in person at a meeting called for that
purpose, of the Board of Trustees or a vote of the holders of a
"majority of the outstanding voting securities" (as defined in the
1940 Act) of the Fund, and
(2) by a majority of the Trustees who are not parties to the New Agreement
or "interested persons" (as defined in the 1940 Act) of the Fund, the
Trust, Touchstone Advisors or OpCap Advisors.
Termination of New Agreement. The New Agreement provides that it may be
terminated at any time without penalty:
(1) by Touchstone Advisors, by the Trustees or by a vote of the majority
of the outstanding voting securities of the Fund, upon 60 days written
notice, or
(2) by OpCap Advisors upon 60 days written notice to Touchstone Advisors
and the Trust.
The New Agreement will also terminate upon written notice by one party to the
other party that the other party is in material breach of the New Agreement,
unless the party in material breach of the New Agreement cures the breach to the
reasonable satisfaction of the party alleging the breach within 30 days after
written notice.
Affiliated Brokers. The affiliated brokerage provisions in the New
Agreement permit OpCap Advisors to place brokerage transactions with
broker-dealers affiliated with OpCap Advisors. However, the New Agreement
provides that a broker-dealer affiliated with OpCap Advisors may effect
securities transactions for the Fund only if:
(1) the commissions, fees or other remuneration received or to be received
by that broker-dealer are reasonable and fair compared to the
commissions, fees or other remuneration received by other brokers in
connection with comparable transactions
4
<PAGE>
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.
Execution of Fund Trades. The New Agreement states that OpCap
Advisors'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 OpCap Advisors 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 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. OpCap Advisors is specifically authorized, to the
extent authorized by law, to pay a broker or dealer who provides research
services to OpCap Advisors 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 OpCap Advisors 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.
INFORMATION ABOUT OPCAP ADVISORS
GENERAL INFORMATION
OpCap Advisors is a subsidiary of Oppenheimer Capital. Oppenheimer has
been registered as an investment advisor under the Investment Advisors Act of
1940 since 1968. Its employees perform all investment advisory services provided
to the Fund. As of September 30, 1999, Oppenheimer Capital and its subsidiaries
had assets under management of $56 billion.
The address of OpCap Advisors and its principal executive officers and
directors is 1345 Avenue of the Americas, 49th Floor, New York, NY 10105.
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF OPCAP ADVISORS
<TABLE>
<CAPTION>
Position with
Name OpCap Advisors Principal Occupation
- ------------------------------ -------------------------- ----------------------
<S> <C> <C>
Joseph LaMotta Chairman Chairman Emiritus of
Oppenheimer Capital
Richard Weil Managing Director Head of Corporate
Services and General
Counsel of Oppenheimer
Capital
5
<PAGE>
<CAPTION>
Position with
Name OpCap Advisors Principal Occupation
- ------------------------------ -------------------------- ----------------------
<S> <C> <C>
Anthony Orlando Treasurer Treasurer and
Controller of
Oppenheimer Capital
Frank Polli Secretary Vice President and
Secretary of
Oppenheimer Capital
</TABLE>
INFORMATION ABOUT THE TRANSACTION
DESCRIPTION OF THE TRANSACTION
On October 31, 1999, PIMCO Advisors L.P. ("PIMCO Advisors"), its two
general partners, PIMCO Advisors Holdings L.P. ("PAH") and PIMCO Partners G.P.
("Partners GP"), certain of their affiliates, Allianz of America, Inc. ("Allianz
of America") and certain other parties named therein entered into an
Implementation and Merger Agreement (the "Merger Agreement") pursuant to which
Allianz of America will acquire majority ownership of PIMCO Advisors.
The Merger Agreement provides for the acquisition of PAH by Allianz of
America through a merger of a subsidiary of Allianz of America with and into
PAH. In the merger, all of the outstanding units of limited and general
partnership interest in PAH will be converted into the right to receive cash in
an amount per unit equal to $38.75, subject to downward adjustment if PIMCO
Advisors' investment advisory revenue base, expressed as a "revenue run rate,"
declines (excluding market-based changes) below a specified level (the "Unit
Transaction Price"). As a result of the merger, PAH will become an indirect
wholly-owned subsidiary of Allianz of America.
Following the merger, subsidiaries of Allianz of America will, in a
series of transactions, acquire for cash at the Unit Transaction Price
substantially all of the remaining interests in PIMCO Advisors (the "PA Units"),
other than those interests beneficially owned by Pacific Life Insurance Company
("Pacific Life"). As part of the transaction, a subsidiary of Allianz of America
will acquire Partners GP through an acquisition of the managing general partner
interest in Partners GP from PIMCO Partners LLC (the managing general partner of
Partners GP) for approximately $5.5 million. Pacific Life, which through
subsidiaries owns approximately a 31% interest in PIMCO Advisors, will maintain
an indirect interest in PIMCO Advisors following the closing. In connection with
the closing, Allianz of America will enter into a put/call arrangement for the
eventual disposition of Pacific Life's indirect investment in PIMCO Advisors.
As a result of the transactions contemplated by the Merger Agreement
(together, the "Transaction"), Allianz of America will control PIMCO Advisors,
having acquired approximately 70% of the outstanding partnership interests in
PIMCO Advisors. The Transaction is expected to be completed by the end of the
first quarter of 2000, although there is no assurance that the Transaction will
be completed.
6
<PAGE>
Completion of the Transaction is subject to a number of conditions
including, among others:
o The approval of the public unitholders of PAH,
o The receipt of certain regulatory approvals, and
o PIMCO Advisors' revenue run-rate for all accounts managed by PIMCO
Advisors and its subsidiaries being at least 75% of the September 30,
1999 amount.
PIMCO Advisors has agreed to use its reasonable best efforts to obtain,
prior to completion of the Transaction, the approval of the New Agreement by the
shareholders of the Fund.
Pursuant to the Merger Agreement, PIMCO Advisors and Pacific Investment
Management Company, a subsidiary partnership of PIMCO Advisors, will enter into
employment, retention and incentive arrangements with key employees of PIMCO
Advisors and Pacific Investment Management Company. These benefits include new
employment agreements, retention and incentive awards vesting over a term of
years and restricted stock grants. In addition, certain key employees of PIMCO
Advisors' investment advisory subsidiaries will receive payments in respect of
previously existing non-competition arrangements in connection with the
acquisition by Allianz of America of the PA Units on which such arrangements
were based.
POST-TRANSACTION STRUCTURE AND OPERATIONS
Upon completion of the Transaction, PIMCO Advisors and its subsidiaries
will be controlled by Allianz of America. Allianz of America is a holding
company that owns several insurance and financial service companies and is a
subsidiary of Allianz AG, which, together with its subsidiaries, comprise the
world's second largest insurance group as measured by premium income. Allianz of
America will control PIMCO Advisors through its Managing Member interest in
PacPartners LLC, which will be the sole general partner of PIMCO Advisors
following the Transaction. While Allianz of America will control PacPartners
LLC, Pacific Life will hold a portion of its continuing interest in PIMCO
Advisors through an interest in PacPartners LLC.
Operationally, PIMCO Advisors is expected to become a unit of Allianz
Asset Management ("AAM"), the division of Allianz that coordinates global
Allianz asset management activities. The equity operations of PIMCO Advisors and
its subsidiaries will remain separately branded and managed. PIMCO Advisors and
its subsidiaries are currently expected to continue to operate in the United
States under their existing names.
Both William S. Thompson Jr., the current Chief Executive Officer of
PIMCO Advisors, and William H. Gross, the current Chief Investment Officer of
PIMCO Advisors, will have roles on the Executive Committee of AAM, with Mr.
Thompson serving as the Executive Committee's Deputy Chairman. In the
Transaction, Messrs. Thompson and Gross will enter into
7
<PAGE>
employment contracts with a term of seven years following the Transaction. Other
key employees of PIMCO Advisors have also contractually agreed to remain with
PIMCO Advisors following the Transaction.
DESCRIPTION OF ALLIANZ AND ITS AFFILIATES
Allianz AG, the parent of Allianz of America, is a publicly traded
German Aktiengesellschaft and which, together with its subsidiaries, comprise
the world's second largest insurance group as measured by premium income.
Allianz AG is a leading provider of financial services, particularly in Europe,
and is represented in 68 countries world-wide through subsidiaries, branch and
representative offices, and other affiliated entities. The Allianz group
currently has assets under management of more than $390 billion, and in its last
fiscal year wrote approximately $50 billion in gross insurance premiums. After
completion of the Transaction, PIMCO Advisors and the Allianz group combined
will have over $650 billion in assets under management. Allianz AG's address is:
Allianz Aktiengesellschaft, a Koniginstrasse 28, D-80802, Munich, Germany.
Affiliates of Allianz AG currently include Dresdner Bank AG, Deutsche
Bank AG, Munich Re, and Hypo Vereinsbank. These entities, as well as certain
broker-dealers controlled by or affiliated with these entities, such as Bankers
Trust Company, BT Alex. Brown Incorporated, Morgan Grenfell and Kleinwort Benson
may be considered as "Affiliated Brokers." Once the Transaction is completed,
absent an SEC exemption or other relief, the Fund would generally be precluded
from effecting principal transactions with the Affiliated Brokers, and its
ability to purchase securities from underwriting syndicates including an
Affiliated Broker or to utilize the Affiliated Brokers for agency transactions
would be subject to restrictions. PIMCO Advisors does not believe that
applicable restrictions on transactions with the Affiliated Brokers described
above will materially adversely affect its ability, post-closing, to provide
services to the Fund, the Fund's ability to take advantage of market
opportunities, or the Fund's overall performance. Other series of the Touchstone
Series Trust for which PIMCO Advisors (or an affiliate) does not serve as
investment adviser would not, in general, be subject to these same restrictions
post-closing.
SECTION 15(F) OF THE 1940 ACT
Section 15(f) provides a non-exclusive safe harbor for an investment
adviser or any affiliated persons to receive any amount or benefit in connection
with a change of control of the investment adviser to an investment company as
long as two conditions are satisfied. First, an "unfair burden" must not be
imposed on investment company clients of the adviser as a result of the
transaction, or any express or implied terms, conditions or understandings
applicable to the transaction. The term "unfair burden" (as defined in the 1940
Act) includes any arrangement during the two-year period after the transaction
whereby the investment advisor (or predecessor or successor advisor), or any
"interested person" (as defined in the 1940 Act) (an "Interested Person") of any
such adviser, receives or is entitled to receive any compensation, directly or
indirectly, from such an investment company or its security holders (other than
fees for bona fide investment advisory or other services) or from any other
person in connection with the purchase or sale of securities or other property
to, from or on behalf of such investment company. The
8
<PAGE>
Board of Trustees has been advised that PIMCO Advisors is aware of no
circumstances arising from the Transaction that might result in an unfair burden
being imposed on the Fund. Allianz and each of the other parties to the
Agreement have agreed to use their reasonable best efforts to assure compliance
with Section 15(f) as it applies to the Transaction during such two-year period.
The second condition of Section 15(f) is that during the three-year
period after the transaction, at least 75% of each such investment company's
board of directors must not be Interested Persons of the investment advisor (or
predecessor or successor advisor). The Board of Trustees of Touchstone Series
Trust does not currently comply with this requirement because two of its six
Trustees (Phillip R. Cox and W. J. Williams) are affiliated persons of a
broker-dealer. Therefore, Mr. Cox and Mr. Williams are deemed to be Interested
Persons of OpCap Advisors. In connection with the Transaction, an application
requesting exemption from the 75% requirement will be filed with the SEC on
behalf of Touchstone Series Trust. There can be no assurance that the exemption
will be granted. In addition, Allianz has agreed with PIMCO Advisors that it
will use its reasonable best efforts to comply with the 75% requirement during
the three-year period through one or more intermediaries.
VOTING AND SHARE OWNERSHIP
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 all
classes of shares will vote together as a single class.
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 approval of the New Agreement. The Trust's
Board of Trustees does not know of any other matter that may be presented at the
meeting. If any other matters are 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 for purposes of determining a quorum at the meeting, but the abstention
will have the effect of a vote against the New Agreement.
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 and thus will also have the
effect of a vote against the New Agreement.
A shareholder may revoke the accompanying proxy at any time before 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.
9
<PAGE>
SHARE OWNERSHIP INFORMATION
Basic Information. The total number of outstanding shares of the Fund
and of each class of the Fund as of December 24, 1999, the record date for the
special meeting, is shown below.
<TABLE>
<CAPTION>
Number of Outstanding Percentage of Total Outstanding
Shares Shares of the Fund
- ----------------------------- -------------------------- ---------------------------------
<S> <C> <C>
Class A Shares 331,217.01 58.26%
Class C Shares 237,260.23 41.74%
Total Fund Shares 568,477.24 100.00%
</TABLE>
Class A Shareholders. As of December 20, 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 149,389.7520 45.22%
(Attn: W/S Treasury)
400 Broadway
Cincinnati, Ohio 45202-3341
</TABLE>
Western-Southern Life Assurance Company has indicated that it intends
to vote for the approval of the New Agreement.
Class C Shareholders. As of December 20, 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 148,202.0240 62.56%
(Attn: W/S Treasury)
400 Broadway
Cincinnati, Ohio 45202-3341
</TABLE>
Western-Southern Life Assurance Company has indicated that it intends
to vote for the approval of the New Agreement.
10
<PAGE>
Share Ownership of Trustees and Officers. As of December 20, 1999, none
of the members of the Board of Trustees of Touchstone Series Trust owned shares
of the Fund. As of December 20, 1999, the following officers of Touchstone
Series Trust were record or beneficial owners of Class A shares of the Fund:
<TABLE>
<CAPTION>
Name and Address of Officer Number of Shares Percent of Class
- --------------------------------------------------- ------------------------ -----------------------
<S> <C> <C>
David E. Dennison 263.148 *
6654 San Mateo Drive
West Chester, Ohio 45069
Jill T. McGruder 693.148 *
6820 Hammerstone Way
Cincinnati, Ohio 45227
</TABLE>
*Less than 1% of the outstanding shares of the class
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 Touchstone Advisors. All costs associated with the
preparation, filing and distribution of this Proxy Statement, the solicitation
and the meeting will be borne by OpCap Advisors or its affiliates and not by the
Fund or the Trust.
D. F. King & Co., Inc. has been engaged to assist in the solicitation
of proxies. As the special meeting date approaches, a representative of King may
contact Fund shareholders whose votes have not yet been received. The
anticipated cost of the proxy solicitation is approximately $10,000. Such costs
will be borne by OpCap Advisors or its affiliates, not by the Fund or the Trust.
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 TOUCHSTONE ADVISORS AND OTHER SERVICE PROVIDERS
Touchstone Advisors is an indirect, wholly-owned subsidiary of
Western-Southern Life Assurance Company. The address of Touchstone Advisors is
311 Pike Street, Cincinnati, Ohio 45202, and the address of Western-Southern
Life Assurance Company 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 is 311 Pike Street,
11
<PAGE>
Cincinnati, Ohio 45202. For the period from January 1, 1999, through December
15, 1999, Touchstone Securities received $2,415 in underwriting commissions from
Touchstone Balanced Fund. For the period from January 1, 1999, through December
15, 1999, Touchstone Securities received $24,729.79 in underwriting commissions
from the funds in the Touchstone complex.
The following officers of the Trust hold positions with Touchstone
Advisors and Touchstone Securities.
<TABLE>
<CAPTION>
Position with Position with
Name Position with Trust Touchstone Advisors Touchstone Securities
- ------------------------ ----------------------- ------------------------------ -----------------------------
<S> <C> <C> <C>
Jill T. McGruder President Director, President and Director, President and
Chief Executive Officer Chief Executive Officer
Edward S. Heenan Vice President Vice President and Director and Controller
Comptroller
James J. Vance Treasurer Treasurer Treasurer
- ------------------------ ----------------------- ------------------------------ -----------------------------
</TABLE>
Investors Bank & Trust Company serves as the administrator, custodian
and fund accounting agent for the Fund. The address of Investors Bank is 200
Clarendon Street, Boston, Massachusetts 02116.
INFORMATION ABOUT OPCAP ADVISORS, PIMCO ADVISORS AND ALLIANZ OF AMERICA
All information contained in this Proxy Statement and the accompanying
materials about OpCap Advisors, PIMCO Advisors and Allianz of America and their
respective affiliates and the Transaction has been provided by PIMCO Advisors.
INFORMATION ABOUT PRIOR AGREEMENTS WITH OPCAP ADVISORS
More information about the 1999 Agreement and other prior agreements
between Touchstone Advisors and OpCap Advisors is included in Exhibit C. Exhibit
C includes information about Board and shareholder actions related to each
agreement.
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 period from
January 1, 1999, through September 30, 1999, brokerage transactions were not
placed with any person affiliated with the Fund, the Trust, Touchstone Advisors
or OpCap Advisors.
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.
12
<PAGE>
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.
January 3, 2000 By order of the Board of Trustees of the Trust.
Cincinnati, Ohio Cynthia Surprise, Secretary
13
<PAGE>
EXHIBIT A
COMPARISON OF NEW AGREEMENT TO 1999 AGREEMENT
ADDITIONS ARE SHOWN BY DOUBLE UNDERLINE
DELETIONS ARE SHOWN BY STRIKETHROUGH
- --------------------------------------------------------------------------------
SUB-ADVISORY AGREEMENT
TOUCHSTONE BALANCED FUND
TOUCHSTONE SERIES TRUST
This SUB-ADVISORY AGREEMENT is made as of [January 1, 1999]__________,
2000, by and between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the
- ----
"Advisor"), and OPCAP ADVISORS (the "Sub-Advisor"), a subsidiary of Oppenheimer
Capital, a Delaware general partnership.
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 Balanced Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it
with portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of those assets of the
Fund allocated to it by the Advisor (the "Fund Assets"), subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Sub-Advisor hereby accepts such
employment and agrees during such period to render the services and to perform
the duties called for by this Agreement for the compensation herein provided.
The Sub-
A-1
<PAGE>
Advisor shall at all times maintain its registration as an investment advisor
under the Investment Advisers Act of 1940 and shall otherwise comply in all
material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
2. DUTIES OF THE SUB-ADVISOR. The Sub-Advisor will provide the
following services and undertake the following duties:
a. The Sub-Advisor will manage the investment and reinvestment
of the assets of the Fund, subject to and in accordance with the
investment objectives, policies and restrictions of the Fund and any
directions which the Advisor or the Trust's Board of Trustees may give
from time to time with respect to the Fund. In furtherance of the
foregoing, the Sub-Advisor will make all determinations with respect to
the investment of the assets of the Fund and the purchase and sale of
portfolio securities and shall take such steps as may be necessary or
advisable to implement the same. The Sub-Advisor also will determine
the manner in which voting rights, rights to consent to corporate
action and any other rights pertaining to the portfolio securities will
be exercised. The Sub-Advisor will render regular reports to the
Trust's Board of Trustees, 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 request.
b. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not limited to: (i)
permission to use the Sub-Advisor's name as provided in Section 5, (ii)
permission to use the past performance and investment history of the
Sub-Advisor as the same is applicable to the Fund, (iii) access to the
individual(s) responsible for day-to-day management of the Fund for
marketing conferences, teleconferences and other activities involving
the promotion of the Fund, subject to the reasonable request of the
Advisor, (iv) permission to use biographical and historical data of the
Sub-Advisor and individual manager(s), and (v) permission to use the
names of clients to which the Sub-Advisor provides investment
management services, subject to any restrictions imposed by clients on
the use of such names.
c. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in accordance with the
policies with respect thereto set forth in the Trust's registration
statements under the 1940 Act and the Securities Act of 1933, as such
registration statements may be in effect from time to time. In
connection with the placement of orders for the execution of portfolio
transactions, the Sub-Advisor will create and maintain all necessary
brokerage records
A-2
<PAGE>
of the Fund in accordance with all applicable laws, rules and
regulations, including but not limited to records required by Section
31(a) of the 1940 Act. All records shall be the property of the Trust
and shall be available for inspection and use by the Securities and
Exchange Commission (the "SEC"), the Trust or any person retained by
the Trust. Where applicable, such records shall be maintained by the
Advisor for the periods and in the places required by Rule 31a-2 under
the 1940 Act. When placing orders with brokers and dealers, the
Sub-Advisor's primary objective shall be to obtain the most favorable
price and execution available for the Fund, and in placing such orders
the Sub-Advisor may consider a number of factors, including, without
limitation, the overall direct net economic result to the Fund
(including commissions, which may not be the lowest available but
ordinarily should not be higher than the generally prevailing
competitive range), the financial strength and stability of the broker,
the efficiency with which the transaction will be effected, the ability
to effect the transaction at all where a large block is involved and
the availability of the broker or dealer to stand ready to execute
possibly difficult transactions in the future. The Sub-Advisor is
specifically authorized, to the extent authorized by law (including,
without limitation, Section 28(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), to pay a broker or dealer who
provides research services to the Sub-Advisor an amount of commission
for effecting a portfolio transaction in excess of the amount of
commission another broker or dealer would have charged for effecting
such transaction, in recognition of such additional research services
rendered by the broker or dealer, but only if the Sub-Advisor
determines in good faith that the excess commission is reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer viewed in terms of the particular transaction
or the Sub-Advisor's overall responsibilities with respect to
discretionary accounts that it manages, and that the Fund derives or
will derive a reasonably significant benefit from such research
services. The Sub-Advisor will present a written report to the Board of
Trustees of the Trust, at least quarterly, indicating total brokerage
expenses, actual or imputed, as well as the services obtained in
consideration for such expenses, broken down by broker-dealer and
containing such information as the Board of Trustees reasonably shall
request.
d. The Advisor recognizes that, subject to the foregoing
provisions of this Section 2, 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 such affiliate may be a major recipient of brokerage
commissions paid by the Fund. Any such affiliate may effect securities
transactions for the Fund only if (1) the commissions, fees or other
remuneration received or to be received by it are reasonable and fair
compared to the commissions, fees or other remuneration received by
other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange
during a comparable period of time and (2) the Trustees, 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.
A-3
<PAGE>
e. The Advisor understands that (i) when orders to purchase or
sell the same security on identical terms are placed by more than one
of the funds and/or other advisory accounts managed by the 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.
f. 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.
g. 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.
h. The Sub-Advisor will manage the Fund Assets and the
investment and reinvestment of such assets so as to comply with the
provisions of the 1940 Act and with Subchapter M of the Internal
Revenue Code of 1986, as amended.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.60% of the
first $20 million of the average daily net assets of the Combined
Funds, 0.50% of such average daily net assets in excess of $20 million
and up to $50 million and 0.40% of such average daily net assets in
excess of $50 million.
b. "Combined Funds," for purposes of this Section 3, means the
combined assets of the Fund and the Touchstone Balanced Fund of the
Touchstone Variable Series Trust, to which fund the Sub-Advisor also
acts as an investment advisor.
c. The fee of the Sub-Advisor hereunder shall be computed and
accrued daily. If the Sub-Advisor serves in such capacity for less than
the whole of any period specified in 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 net assets of the Combined
A-4
<PAGE>
Funds shall be computed by the same method as the Trust and Touchstone
Variable Series Trust use, respectively, to compute the net asset value
of each such Fund for purposes of purchases and redemptions of shares
thereof.
d. The Sub-Advisor reserves the right to waive all or a part
of its fees hereunder.
4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request) (i) the financial condition and
prospects of the Sub-Advisor, (ii) the nature and amount of transactions
affecting the Fund that involve the Sub-Advisor and affiliates of the
Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. At least
annually, the Sub-Advisor shall report to the Trustees the total number and type
of such other accounts and the approximate total asset value thereof (but not
the identities of the beneficial owners of such accounts). The Sub-Advisor
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of business among the Fund and its other clients.
It is understood that the Sub-Advisor may become interested in the
Trust as a shareholder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
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 execution of this Agreement, with a true copy of its currently
effective Code of Ethics and policies regarding insider trading and (ii)
thereafter supply to Advisor copies of any amendments to or restatements of such
Code of Ethics or insider trading policies, and (iii) report to the Board of
Trustees not less often than quarterly
A-5
<PAGE>
with respect to any violations of such Code of Ethics or insider trading
policies by persons covered thereby to the extent that such violations involve
the assets or activities of the Fund.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name
of the Sub-Advisor in any prospectus, sales literature or other material
relating to the Advisor or the Trust in any manner not approved in advance by
the Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses
of its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
6. LIMITATION OF LIABILITY OF THE SUB-ADVISOR. Absent willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Sub-Advisor, the Sub-Advisor shall not be
subject to liability to the Advisor, the Trust or to any shareholder in the Fund
for any act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security. As used in this Section 6, the term "Sub-Advisor" shall
include the Sub-Advisor and/or any of its affiliates and the directors, officers
and employees of the Sub-Advisor and/or any of its affiliates.
7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that
it has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the assets of the Fund
and (ii) the Sub-Advisor shall not seek satisfaction of any such obligation from
the holders of shares of the Fund nor from any Trustee, officer, employee or
agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, until December 31, [1999] 2000; and
it shall continue thereafter ----
A-6
<PAGE>
provided that such continuance is specifically approved by the parties
and, in addition, at least annually by (i) the vote of the holders of
a majority of the outstanding voting securities (as herein defined) of
the Fund or by vote of a majority of the Trust's Board of Trustees and
(ii) by the vote of a majority of the Trustees who are not parties to
this Agreement or interested persons of either the Advisor or the
Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor, by the Trust's Board of
Trustees or by a vote of the majority of the outstanding voting
securities of the Fund, in any such case upon not less than 60 days'
prior written notice to the Sub-Advisor and (ii) by the Sub-Advisor
upon not less than 60 days' prior written notice to the Advisor and the
Trust. This Agreement shall terminate automatically in the event of its
assignment.
c. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Fund affected by
such change.
d. The terms "assignment," "interested persons" and "majority
of the outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or
shall be found to be invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the other party at such address as such other party may designate in accordance
with this paragraph for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Trust and that of the Advisor
for this purpose shall be 311 Pike Street, Cincinnati, Ohio 45202 and that the
address of the Sub-Advisor shall be 225 Liberty Street, 16th Floor, New York,
New York 10281.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
A-7
<PAGE>
TOUCHSTONE ADVISORS, INC.
Attest:
- --------------------------------- ----------------------------------
[/s/ Patricia J. Wilson] [BY /s/ Edward G. Harness, Jr.]
[Name: Patricia J. Wilson] [Edward G. Harness, Jr.]
[Title: Chief Compliance Officer] [President]
BY
Name: Name:
- ---------------------------------- ----------------------------------
Title: Title:
- ---------------------------------- ----------------------------------
OPCAP ADVISORS
Attest:
[/s/ Thomas E. Duggan] [BY /s/ Bernard H. Garil]
[Name: Thomas E. Duggan] [Name: Bernard H. Garil]
[Title: Secretary] [Title: President]
BY
Name: Name:
- --------------------------------- ----------------------------------
Title: Title:
- --------------------------------- ----------------------------------
A-8
<PAGE>
EXHIBIT B
The following table contains information about other registered
investment companies or separate portfolios of other registered investment
companies that are advised by OpCap Advisors 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.
<TABLE>
<CAPTION>
FUND APPROXIMATE NET ASSETS (AS OF 12/30/99)
- ---- ---------------------------------------
<S> <C>
Quest Balanced Value Fund $ 2,255,559,666
LSA Variable Series Trust (Balanced Fund) $ 5,209,012
</TABLE>
OpCap Advisors manages the investment and business affairs of regulated
investment companies, and acts as subadviser to other regulated investment
companies operating under the overall supervision of the Boards of Directors or
Trustees of such companies, pursuant to investment advisory or subadvisory
contracts, the terms of which have been adopted and reviewed in accordance with
Section 15 of the Investment Company Act of 1940. The standard fees, which are
described below, are calculated at an annual rate as a percentage of average
daily net assets of each investment company and are set forth in each investment
company prospectus.
As adviser to registered investment companies, OpCap Advisors charges
equity portfolios: 0.80% on the first $400 million; 0.75% on the next $400
million; and 0.70% on all assets in excess of $800 million. Its advisory fee for
U.S. government portfolios is 0.60%. As adviser to money market funds, its fee
is 0.50% on the first $100 million; 0.45% on the next $200 million; and 0.40% on
all assets over $300 million.
Fees for acting as subadviser to registered investment companies are
negotiated. OpCap Advisors' basic fee for acting as subadviser to domestic
equity funds is .40% with breakpoints on assets above certain levels.
B-1
<PAGE>
EXHIBIT C
INFORMATION ABOUT PRIOR AGREEMENTS WITH OPCAP ADVISORS
BACKGROUND
Before January 1, 1999, Touchstone Series Trust was known as Select
Advisors Trust A and the Touchstone Balanced Fund was known as Touchstone
Balanced 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 Balanced Portfolio of Select Advisors Portfolios. In
addition, Touchstone Balanced Fund C ("Fund C") of Select Advisors Trust C
invested all of its investable assets in the Balanced Portfolio.
1997 AGREEMENT
Touchstone Advisors, Inc. served as the investment advisor to Select
Advisors Portfolio. Touchstone Advisors, in turn, engaged a portfolio advisor to
manage the Balanced Portfolio. Touchstone Advisors, on behalf of the Balanced
Portfolio, entered into a portfolio advisory agreement with OpCap Advisors dated
as of May 1, 1997 (the "1997 Agreement"). The Board of Trustees of the Select
Advisors Portfolios approved the 1997 Agreement at a meeting held on February
14, 1997. The shareholders of Fund A and the shareholders of Fund C and the
interest holders of the Balanced Portfolio approved the 1997 Agreement on April
23, 1997.
Effective November 5, 1997, PIMCO Advisors L.P. completed a merger
transaction with Oppenheimer Group, Inc. As a result of the transaction, OpCap
Advisors became an indirect subsidiary of PIMCO Advisors and, as required by the
Investment Company Act of 1940, as amended, the 1997 Agreement terminated.
Touchstone Advisors and OpCap Advisors entered into an amended portfolio
advisory agreement (the "Amended 1997 Agreement) that was identical to the 1997
Agreement except for the effective and termination dates. The Board of Trustees
of Select Advisors Portfolios approved the Amended 1997 Agreement on February
14, 1997. The shareholders of Fund A and the shareholders of Fund C and the
interest holders of the Balanced Portfolio approved the Amended 1997 Agreement
on April 23, 1997.
THE TRUST REORGANIZATION
Immediately after the close of business on December 31, 1998, each of
Fund A and Fund C withdrew its investment from Select Advisors Portfolios as
part of a reorganization of the Touchstone mutual fund complex. As part of the
reorganization, the following actions were taken.
o The name of Select Advisors Trust A was changed to Touchstone Series
Trust.
o The name of Touchstone Balanced Fund A was changed to Touchstone
Balanced Fund (the "Fund").
- --------
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.
C-1
<PAGE>
o Two classes of shares, Class A and Class C, were established in the
Fund.
o Shares of the Fund outstanding on December 31, 1998 were retitled as
Class A shares.
o 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.
As a result of the reorganization, all of the persons who owned shares
of beneficial interest of the Balanced Portfolio as of December 31, 1998,
directly or indirectly through Fund A or Fund C, became Fund shareholders.
Shareholders of Fund A became Class A shareholders of the Fund and shareholders
of Fund C became Class C shareholders of the Fund.
1999 AGREEMENT
In connection with the reorganization, the Trust entered into an
investment advisory agreement with Touchstone Advisors dated as of January 1,
1999. In turn, Touchstone Advisors, on behalf of the Fund, entered into a new
sub-advisory agreement with OpCap Advisors dated January 1, 1999 (the "1999
Agreement"). The Board of Trustees approved the 1999 Agreement at a meeting held
on December 17, 1998.
The 1999 Agreement is identical to the Amended 1997 Agreement except
for the effective date and termination date, revisions that reflect the
reorganization of the Touchstone mutual fund complex and other updating or
conforming revisions. These revisions included:
o Changing some of the terminology used in the 1999 Agreement, such as
referring to OpCap Advisors as the sub-advisor rather than the
portfolio advisor
o Changing references to Select Advisors Trust A to Touchstone Series
Trust
o Changing references to Touchstone Balance Fund A to Touchstone
Balanced Fund
On December 16, 1999, the Board of Trustees, including a majority of
the independent trustees, approved the continuance of the 1999 Agreement for a
period of one year beginning January 1, 2000.
C-2
<PAGE>
January 3, 2000
Dear Shareholder:
I am writing to ask for your support of an important proposal affecting
your Touchstone Balanced Fund. You are being asked to approve the new
sub-advisory agreement between Touchstone Advisors, Inc., advisor to your Fund,
and OpCap Advisors.
OpCap Advisors, an indirect subsidiary of PIMCO Advisors, L.P., has
managed the investments of your Fund since May 1, 1997, pursuant to agreements
approved by the Board of Trustees and the Fund shareholders. The current
sub-advisory agreement with OpCap Advisors will terminate automatically when
Allianz of America, Inc. completes its acquisition of a majority ownership of
PIMCO Advisors, L.P. Accordingly, you are being asked to approve a new
sub-advisory agreement between Touchstone Advisors and OpCap Advisors.
Approval of the new sub-advisory agreement should not affect you as a
Fund shareholder. The agreement you are being asked to approve is substantially
identical to the current agreement. The advisory fees paid by your Fund will not
increase, and the investment objectives of your Fund will remain the same.
The Board of Trustees has determined that the new sub-advisory
agreement is in the best interest of Fund shareholders. I encourage you to vote
"FOR" the new sub-advisory agreement.
Shareholders of the Fund will vote on the proposal to approve the new
sub-advisory agreement at an upcoming Special Meeting of shareholders on
February 21, 2000. You may vote on this proposal by mail, telephone, fax or in
person.
By mail: Complete, sign and mail the enclosed Proxy Card in
the postage-paid envelope that has been provided.
By phone: Call 1-800-769-6414.
By fax: Complete and sign the enclosed Proxy Card and fax
both sides to 212-269-2796.
In person: Attend and vote your shares at the meeting.
If you have any questions or need any help in voting your shares,
please call the Fund's agent (D.F. King & Co., Inc.) toll-free at
1-800-769-6414.
Sincerely,
Jill T. McGruder, President
TOUCHSTONE BALANCED FUND
(a series of Touchstone Series Trust)
The undersigned appoints Jill T. McGruder and David Dennison 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
Balanced Fund, a separate series of the Touchstone Series Trust, to be held at
10:00 a.m. on February 21, at the offices of the Trust, 311 Pike Street,
Cincinnati, Ohio, and at any adjournment thereof.
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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.
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To approve or disapprove a new sub-advisory
agreement between Touchstone Advisors, Inc. FOR AGAINST ABSTAIN
and OpCap Advisors [ ] [ ] [ ]
Total shares attributable to the undersigned: _________________
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PLEASE VOTE, DATE AND SIGN EXACTLY AS YOUR Note: The undersigned hereby acknowledges
NAME APPEARS BELOW, AND RETURN THIS FORM receipt of the notice of meeting and proxy
IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. statement and revokes any proxy heretofore
given with respect to the votes covered by this
proxy.
Dated: ___________________, 2000
______________________________________
Signature
______________________________________
Signature If Jointly Held
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