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EXHIBIT (d7)
SUB-ADVISORY AGREEMENT
TOUCHSTONE INCOME OPPORTUNITY FUND
TOUCHSTONE SERIES TRUST
This SUB-ADVISORY AGREEMENT is made as of January 1, 1999, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
ALLIANCE CAPITAL MANAGEMENT, L.P., a limited partnership organized under the
laws of Delaware (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Series Trust (formerly Select Advisors Trust A) (the "Trust"), a Massachusetts
business trust organized pursuant to a Declaration of Trust dated February 7,
1994 and registered as an open-end diversified management investment company
under the Investment Company Act of 1940 (the "1940 Act") to provide investment
advisory services to the Touchstone Income Opportunity 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
oversight responsibilities of the Advisor under the Advisory Agreement and of
the Trust's Board of Trustees under applicable law, 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
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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
subject to the oversight responsibilities of the Advisor under the
Advisory Agreement and of the Trust's Board of Trustees under
applicable law, under each case 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, and (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 to which the Sub-Advisor provides investment
management services, subject to receipt of the consent of such clients
to the use of their 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
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orders for the execution of portfolio transactions, the Sub-Advisor
will create and maintain all necessary brokerage records of the Fund in
accordance with all applicable laws, rules and regulations, including
but not limited to records required by Section 31(a) of the 1940 Act.
All records shall be the property of the Trust and shall be available
for inspection and use by the Securities and Exchange Commission (the
"SEC"), the Trust or any person retained by the Trust. Where
applicable, such records shall be maintained by the Advisor for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
When placing orders with brokers and dealers, the Sub-Advisor'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. 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. In the event of any reorganization(s) or other change(s) in the
Sub-Advisor, its executive officers or members of its investment (or
comparable) committee that, individually or collectively, are likely to
have a material adverse effect on the ability of the Sub-Advisor to
manage the Fund or otherwise perform its obligations to the Advisor and
the Trust under this Agreement, 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. In
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addition, the Sub-Advisor will notify the Advisor of any change in
membership of the Sub-Advisor's general partners 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.
3. COMPENSATION OF THE SUB-ADVISOR. 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 0.40% of the
first $50 million of the average daily net assets of the Fund, 0.35% of the
average daily net assets of the Fund in excess of $50 million and up to $70
million and 0.30% of the average daily net assets of the Fund in excess of $70
million and up to $90 million and 0.25% of the average daily net assets of the
Fund in excess of $90 million. 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 3, the compensation to the Sub-Advisor shall be
prorated. For purposes of calculating the Sub-Advisor's fee, the daily value of
the Fund's net 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 interests thereof.
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 nature and amount of
transactions affecting the Fund that involve the Sub-Advisor and affiliates of
the Sub-Advisor, (ii) 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 (iii) 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
agrees to submit to the Trust a statement defining its policies with respect to
the allocation of investment opportunities among the Fund and its other clients.
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It is understood that the Sub-Advisor may become interested in the
Trust as an interest holder or otherwise.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
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 holder of an interest
in the Fund for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security. 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
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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; and it
shall continue thereafter provided that such continuance is
specifically approved by the parties and, in addition, at least
annually by (i) the vote of the holders of a majority of the
outstanding voting securities (as herein defined) of the 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 (as
defined below).
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" 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
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shall be 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000 and that the address of the
Sub-Advisor shall be 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio. The captions in this Agreement are
included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
Attest:
BY
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Xxxxxx X. Xxxxxxx, Xx.
Name: President
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Title:
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ALLIANCE CAPITAL MANAGEMENT, L.P.
by ALLIANCE CAPITAL MANAGEMENT
CORP., General Partner
Attest:
BY
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Name: Name:
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Title: Title:
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