SUB-ADVISORY AGREEMENT
TOUCHSTONE BALANCED FUND
TOUCHSTONE VARIABLE SERIES TRUST
This SUB-ADVISORY AGREEMENT is made as of __________, 2000, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
OPCAP ADVISORS (the "Sub-Advisor"), [A SUBSIDIARY OF ▇▇▇▇▇▇▇▇▇▇▇ CAPITAL, A
DELAWARE GENERAL PARTNERSHIP] [REVISE REFERENCE TO REFLECT NEW STRUCTURE].
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 (formerly Select Advisors Variable Insurance 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 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-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 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-
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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.
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
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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 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
Funds shall be computed by the same method as the Trust and Touchstone
Series Trust use, respectively, to compute the net asset value of each
such Fund for purposes of purchases and redemptions of shares thereof.
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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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and (ii)
thereafter supply to Advisor copies of any amendments to or restatements of such
Code of Ethics or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ policies, and (iii) report to the Board of
Trustees not less often than quarterly with respect to any violations of such
Code of Ethics or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ policies by persons covered thereby to the
extent that such violations involve the assets or activities of the Fund.
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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 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, 2000; 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
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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 ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and that the
address of the Sub-Advisor shall be ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇. [CONFIRM OPCAP ADDRESS]
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.
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TOUCHSTONE ADVISORS, INC.
Attest:
BY
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Name: Name:
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Title: Title:
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OPCAP ADVISORS
Attest:
BY
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Name: Name:
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Title: Title:
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