FORM OF INVESTMENT ADVISORY AGREEMENT
COUNTRYWIDE STRATEGIC TRUST
INVESTMENT ADVISORY AGREEMENT, dated as of ______________, by and
between TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and
COUNTRYWIDE STRATEGIC TRUST, a Massachusetts business trust created pursuant to
a Declaration of Trust dated _____________, as amended from time to time (the
"Trust").
WHEREAS, the Trust is an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act"); and
WHEREAS, shares of beneficial interest in the Trust are divided into
separate series (each, along with any series which may in the future be
established, a "Fund"); and
WHEREAS, the Trust desires to avail itself of the services,
information, advice, assistance and facilities of an investment advisor and to
have an investment advisor perform for it various investment advisory and
research services and other management services; and
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and desires to provide investment
advisory services to the Trust;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE ADVISOR. The Trust hereby employs the Advisor to
manage the investment and reinvestment of the assets of each Fund subject to the
control and direction of the Trust's Board of Trustees, for the period on the
terms hereinafter set forth. The Advisor hereby accepts such employment and
agrees during such period to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Advisor shall for all
purposes herein be deemed to be 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.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE ADVISOR. In
providing the services and assuming the obligations set forth herein, the
Advisor may, at its expense, employ one or more sub-advisors for any Fund. Any
agreement between the Advisor and a sub-advisor shall be subject to the
renewal, termination and amendment provisions of paragraph 10 hereof. The
Advisor undertakes to provide the following services and to assume the following
obligations:
a) The Advisor will manage the investment and reinvestment of the assets
of each Fund, subject to and in accordance with the respective
investment objectives and policies of each Fund and any directions
which the Trust's Board of Trustees may issue from time to time. In
pursuance of the foregoing, the Advisor may engage separate
investment advisors ("Sub-Advisor(s)") to make all determinations
with respect to the investment of the assets of each Fund, to effect
the purchase and sale of portfolio securities and to take such steps
as may be necessary to implement the same. Such determination and
services by each Sub-Advisor shall also include determining the
manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the portfolio securities shall be
exercised. The Advisor shall, and shall cause each Sub-Advisor
to, render regular reports to the Trust's Board of Trustees
concerning the Trust's and each Fund's investment activities.
b) The Advisor shall, or shall cause the respective Sub-Advisor(s) to
place orders for the execution of all portfolio transactions, in the
name of the respective Fund and 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 amended from time to time. In connection with the
placement of orders for the execution of portfolio transactions, the
Advisor shall create and maintain (or cause the Sub-Advisors to
create and maintain) all necessary brokerage records for each Fund,
which records shall comply 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 (or Sub-Advisor) for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
c) In the event of any reorganization or other change in the
Advisor, its investment principals, supervisors or members
of its investment (or comparable) committee, the Advisor
shall give 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.
d) The Advisor shall bear its expenses of providing services
to the Trust pursuant to this Agreement except such
expenses as are undertaken by the Trust. In addition, the
Advisor shall pay the salaries and fees, if any, of all
Trustees, officers and employees of the Trust who are
affiliated persons, as defined in Section 2(a)(3) of the
1940 Act, of the Advisor.
e) The Advisor will manage, or will cause the Sub-Advisors to
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. EXPENSES. The Trust shall pay the expenses of its operation,
including but not limited to (i) charges and expenses for Trust accounting,
pricing and appraisal services and related overhead, (ii) the charges and
expenses of the Trust's auditors; (iii) the charges and expenses of any
custodian, transfer agent, plan agent, dividend disbursing agent and registrar
appointed by the Trust with respect to the Funds; (iv) brokers' commissions, and
issue and transfer taxes, chargeable to the Trust in connection with securities
transactions to which the Trust is a party; (v) insurance premiums, interest
charges, dues and fees for Trust membership in trade associations and all taxes
and fees payable by the Trust to federal, state or other governmental agencies;
(vi) fees and expenses involved in registering and maintaining registrations of
the Trust and/or shares of the Trust with the SEC, state or blue sky securities
agencies and foreign countries, including the preparation of Prospectuses and
Statements of Additional Information for filing with the SEC; (vii) all expenses
of meetings of Trustees and of shareholders of the Trust and of preparing,
printing and distributing prospectuses, notices, proxy statements and all
reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal counsel to the Trust; (ix) compensation of Trustees of the
Trust; and (x) interest on borrowed money, if any.
4. COMPENSATION OF THE ADVISOR.
a) As compensation for the services rendered and obligations assumed
hereunder by the Advisor, the Trust shall pay to the Advisor
monthly a fee that is equal on an annual basis to that percentage
of the average daily net assets of each Fund set forth on Schedule
1 attached hereto (and with respect to any future Fund, such
percentage as the Trust and the Advisor may agree to from time to
time). Such fee shall be computed and accrued daily. If the
Advisor serves as investment advisor for less than the whole of
any period specified in this Section 4a, the compensation to the
Advisor shall be prorated. For purposes of calculating the
Advisor's fee, the daily value of each Fund's net assets shall be
computed by the same method as the Trust uses to
compute the net asset value of that Fund.
b) The Advisor will pay all fees owing to each Sub-Advisor,
and the Trust shall not be obligated to the Sub-Advisors
in any manner with respect to the compensation of such
Sub-Advisors.
c) The Advisor reserves the right to waive all or a part of
its fee.
5. ACTIVITIES OF THE ADVISOR. The services of the Advisor to the Trust
hereunder are not to be deemed exclusive, and the Advisor shall be free to
render similar services to others. It is understood that the Trustees and
officers of the Trust are or may become interested in the Advisor as
stockholders, officers or otherwise, and that stockholders and officers of the
Advisor are or may become similarly interested in the Trust, and that the
Advisor may become interested in the Trust as a shareholder or otherwise.
6. USE OF NAMES. The Trust will not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; except that the Trust may use
such name in any document which merely refers in accurate terms to its
appointment hereunder or in any situation which is required by the SEC or a
state securities commission; and provided further, that in no event shall such
approval be unreasonably withheld. The Advisor will not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; except that the Advisor may use such name in any document
which merely refers in accurate terms to the appointment of the Advisor
hereunder or in any situation which is required by the SEC or a state securities
commission. In all other cases, the parties may use such names to the extent
that the use is approved by the party named, it being agreed that in no event
shall such approval be unreasonably withheld.
The Trustees of the Trust acknowledge that the Advisor has
reserved for itself the rights to the name "Touchstone Tax-Free Trust" (or any
similar names) and that use by the Trust of such name shall continue only with
the continuing consent of the Advisor, which consent may be withdrawn at any
time, effective immediately, upon written notice thereof to the Trust.
7. LIMITATION OF LIABILITY OF THE ADVISOR.
a) Absent willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder
on the part of the Advisor, the Advisor shall not be
subject to liability to the Trust or to any shareholder in
any 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 7, the term
"Advisor" shall include Touchstone Advisors, Inc. and/or
any of its affiliates and the directors, officers and
employees of Touchstone Advisors, Inc. and/or any of its
affiliates.
b) The Trust will indemnify the Advisor against, and hold it
harmless from, any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees
and expenses) resulting from acts or omissions of
the Trust. Indemnification shall be made only after: (i)
a final decision on the merits by a court or other
body before whom the proceeding was brought that the Trust
was liable for the damages claimed or (ii) in the
absence of such a decision, a reasonable determination
based upon a review of the facts, that the Trust was
liable for the damages claimed, which determination shall
be made by either (a) the vote of a majority of a
quorum of Trustees of the Trust who are neither
"interested persons" of the Trust nor parties to the
proceeding "disinterested non-party Trustees") or (b) an
independent legal counsel satisfactory to the parties
hereto, whose determination shall be set forth in a
written opinion. The Advisor shall be entitled to
advances from the Trust for payment of the reasonable
expenses incurred by it in connection with the matter as
to which it is seeking indemnification in the manner and
to the fullest extent that would be permissible under the
applicable provisions of the General Corporation Law of
Ohio. The Advisor shall provide to the Trust a written
affirmation of its good faith belief that the standard of
conduct necessary for indemnification under such law
has been met and a written undertaking to repay any such
advance if it should ultimately be determined that the
standard of conduct has not been met. In addition, at
least one of the following additional conditions shall
be met: (i) the Advisor shall provide security in form
and amount acceptable to the Trust for its undertaking;
(ii) the Trust is insured against losses arising by reason
of the advance; or (iii) a majority of a quorum of
the Trustees of the Trust, the members of which majority
are disinterested non-party Trustees, or independent
legal counsel in a written opinion, shall have determined,
based on a review of facts readily available to the
Trust at the time the advance is proposed to be made, that
there is reason to believe that the Advisor will
ultimately be found to be entitled to indemnification.
8. LIMITATION OF TRUST'S LIABILITY. The 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 Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Advisor shall not seek satisfaction of any such obligation
from the holders of the shares of any Fund nor from any Trustee, officer,
employee or agent of the Trust.
9. FORCE MAJEURE. The 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 Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
10. RENEWAL, TERMINATION AND AMENDMENT.
a) This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, for a period of two
years from the date hereof and it shall continue
indefinitely thereafter as to each Fund, provided that
such continuance is specifically approved by the parties
hereto and, in addition, at least annually by (i) the vote
of holders of a majority of the outstanding voting
securities of the affected 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 the 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, with respect
to any Fund(s), without payment of any penalty, by the
Trust's Board of Trustees or by a vote of the majority of
the outstanding voting securities of the affected Fund(s)
upon 60 days' prior written notice to the Advisor and by
the Advisor upon 60 days' prior written notice to the
Trust.
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 any Fund affected by such change.
This Agreement shall terminate automatically in the event
of its assignment.
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.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
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. Pursuant to the Trust's Declaration of Trust, dated as of April 13,
1981, the obligations of this Agreement are not binding upon any of the Trustees
or shareholders of the Trust individually, but bind only the Trust estate.
COUNTRYWIDE STRATEGIC TRUST
By:________________________
TOUCHSTONE ADVISORS, INC.
By:__________________________
SCHEDULE 1
EMERGING GROWTH FUND - 0.80% of average daily net assets
INTERNATIONAL EQUITY FUND - 0.95% of average daily net assets
VALUE PLUS FUND - 0.75% of average daily net assets
ENHANCED 30 FUND - 0.65% of average daily net assets
