SUB-ADVISORY AGREEMENT
TOUCHSTONE EMERGING GROWTH FUND
TOUCHSTONE VARIABLE SERIES TRUST
This SUB-ADVISORY AGREEMENT is made as of May 1, 2001, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and TCW
INVESTMENT MANAGEMENT COMPANY, a California 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
Variable Series Trust (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 with
respect to certain assets of the Touchstone Emerging Growth Fund (the "Fund");
and
WHEREAS, the Sub-Advisor also is an investment advisor registered under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it
with portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of the ▇▇▇-▇▇▇▇▇▇▇.▇▇ accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of that portion of the
assets of the Fund allocated to it by the Advisor (which portion may be changed
by the Advisor by not less than ten days prior written notice) (the said
portion, as it may be changed from time to time, being herein called the "Fund
Assets"), subject to the control and direction of the Advisor and the Trust's
Board of Trustees, for the period and on the terms hereinafter set forth. The
Sub-Advisor hereby accepts such employment and agrees during such period to
render the services and to perform the duties called for by this Agreement for
the compensation herein provided. The Sub-Advisor shall at all times maintain
its registration as an investment advisor under the Investment Advisers Act of
1940 and shall otherwise comply in all material respects with all applicable
laws and regulations, both state and federal. The Sub-Advisor shall for all
purposes herein be deemed an independent contractor and shall, except as
expressly provided or authorized (whether
herein or otherwise), have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust or the Fund.
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
written or oral directions which the Advisor or the Trust's Board of
Trustees may give from time to time with respect to the Fund. In
furtherance of the foregoing, the Sub-Advisor will make all
determinations with respect to the investment of the Fund Assets and
the purchase and sale of portfolio securities and shall take such steps
as may be necessary or advisable to implement the same. The Sub-Advisor
also will determine the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining to the
portfolio securities will be exercised. The Sub-Advisor will render
regular reports to the Trust's Board of Trustees, 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; provided, however, that in the absence
of extraordinary circumstances, the individual primarily responsible
for management of Fund Assets for the Sub-Advisor will not be required
to attend in person more than one meeting per year with the trustees of
the Trust.
b. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not limited to: (i)
permission to use the Sub-Advisor's name as provided in Section 5, (ii)
permission to use the past performance and investment history of the
Sub-Advisor with respect to a composite of other funds managed by the
Sub-Advisor that are comparable, in investment objective and
composition, to the Fund, (iii) access to the individual(s) responsible
for day-to-day management of the Fund for marketing conferences,
teleconferences and other activities involving the promotion of the
Fund, subject to the reasonable request of the Advisor, (iv) permission
to use biographical and historical data of the Sub-Advisor and
individual manager(s), and (v) permission to use the names of those
clients pre-approved by the Sub-Advisor to which the Sub-Advisor
provides investment management services, subject to receipt of the
consent of such clients to the use of their names. The Advisor will not
use information about the Sub-Advisor, including the information
described above, with respect to the marketing of the Fund, or
otherwise provide information to third parties, other than such
information that has been either provided to the Advisor by the
Sub-Advisor for this purpose or pre-approved by the Sub-Advisor
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for this purpose. Within a reasonable time from the date of initial
use, the Advisor will provide to the Sub-Advisor copies of materials
used with respect to marketing the Fund, or otherwise provided to third
parties, that include information about the Sub-Advisor, other than
those materials that include only the Sub-Advisor's name and no other
information about the Sub-Advisor.
c. The Sub-Advisor will, in the name of the Fund, place orders for the
execution of all portfolio transactions. 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. 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. The Sub-Advisor shall effect all purchases and sales
of securities in a manner consistent with best execution, taking into account
net price (including commissions) and execution capability and other services
which the broker may provide. In this regard, the Sub-Advisor may effect
transactions which cause the Fund to pay a commission in excess of a commission
which another broker would have charged, provided, however, that the Sub-Advisor
shall have first determined that such commission is reasonable in relation to
the value of the brokerage, research, performance measurement service and other
services performed by the broker.
d. In the event of any change in the ownership of the Sub-Advisor, or
any change in its investment principals primarily responsible for the management
of the Fund Assets under this Agreement the Sub-Advisor shall give the Advisor
and the Trust's Board of Trustees written notice of such change within a
reasonable time (but not later than 30 days) after such change.
e. The Sub-Advisor will bear its expenses of providing services to the
Fund pursuant to this Agreement except such expenses as are undertaken by the
Advisor or the Trust.
f. The Sub-Advisor will manage the Fund Assets and the investment and
reinvestment of such assets so as to comply with the provisions of the 1940 Act
and with Subchapter M of the Internal Revenue Code of 1986, as amended.
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3. Compensation of the Sub-Advisor.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub- Advisor a monthly fee equal on an annual basis to 0.50% of the
average daily net Fund Assets. Such fee shall be computed and accrued
daily. If the Sub-Advisor serves in such capacity for less than the
whole of any period specified in this Section 3a, the compensation to
the Sub-Advisor shall be prorated. For purposes of calculating the
Sub-Advisor's fee, the daily value of the Fund Assets shall be computed
by the same method as the Trust uses to compute the net asset value of
the Fund for purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part of
its fees hereunder.
4. Activities of the ▇▇▇-▇▇▇▇▇▇▇.▇▇ is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Sub-Advisor will report to the Board of Trustees
of the Trust (at regular quarterly meetings and at such other times as such
Board of Trustees reasonably shall request, subject to the limitation on
personal attendance at such meetings set forth in Section 2a) (i) the financial
condition and prospects of the Sub-Advisor, (ii) the nature and amount of
transactions affecting the Fund that involve the Sub-Advisor and affiliates of
the Sub-Advisor, (iii) information regarding any potential conflicts of interest
arising by reason of its continuing provision of advisory services to the Fund
and to its other accounts, and (iv) such other information as the Board of
Trustees shall reasonably request regarding the Fund, the Fund's performance,
the services provided by the Sub-Advisor to the Fund as compared to its other
accounts and the plans of, and the capability of, the Sub-Advisor with respect
to providing future services to the Fund and its other accounts. The Sub-Advisor
represents that a statement defining its policies with respect to the allocation
of investment opportunity among the Fund and its other clients is included in
Part II of the Sub-Advisor's Form ADV as filed with the SEC.
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 and will hereafter supply to
the Advisor, on an annual basis, copies of all amendments or restatements of
such document. Further, the Sub-Advisor will hereafter supply to the Advisor and
the Trust copies of any material amendments of its Form ADV within a reasonable
time period after filing such material amendments with the SEC.
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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 hereby approves 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 each hereby 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, 2002; and it shall continue thereafter
provided that such continuance is specifically approved by the parties and, in
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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 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 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ and that the address of the Sub-Advisor shall be TCW Investment Management
Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, with copies of all non-routine notices to be
sent also to the Sub-Advisor's General Counsel at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
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
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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: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------- BY /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ President
-------------------------------
Title: Chief Compliance Officer
-------------------------------
TCW INVESTMENT MANAGEMENT
COMPANY
Attest: /s/ ▇▇▇▇▇ ▇. Bartier
-------------------------------
BY /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. Bartier Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- -------------------------------
Title: Senior Vice President Title: Managing Director
------------------------------- -------------------------------
Attest: /s/ ▇▇▇▇▇ ▇. Bartier
-------------------------------
BY /s/ Lazarus N. Sun
Name: ▇▇▇▇▇ ▇. Bartier Name: Lazarus N. Sun
------------------------------- -------------------------------
Title: Senior Vice President Title: Vice President
------------------------------- -------------------------------
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