Exhibit (d)(4)
Sub-Investment Advisory Agreement dated as of March 31, 2003 between Banc One
High Yield Partners, LLC and Banc One Investment Advisors Corporation
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of March 31, 2003 by and between BANC ONE INVESTMENT
ADVISORS CORPORATION, an Ohio corporation with its principal office in Columbus,
Ohio (hereinafter called the "Investment Adviser") and BANC ONE HIGH YIELD
PARTNERS, LLC, an investment adviser with its principal office in Columbus, Ohio
(hereinafter called the "Sub-Adviser").
WHEREAS, the Investment Adviser serves as the Investment Adviser to One
Group(R) Income Bond Fund (the "Fund") of One Group(R) Mutual Funds (the
"Trust"), a Massachusetts business trust and an open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Sub-Adviser was previously appointed as sub-adviser for the
Fund pursuant to a Sub-Investment Advisory Agreement, dated as of November 19,
1999, between the Investment Adviser and the Sub-Adviser (the "Original
Agreement")
WHEREAS, the Sub-Adviser is an Ohio limited liability company that is owned
51% by the Investment Adviser and 49% by Pacholder Associates, Inc.
("Pacholder");
WHEREAS, the majority shareholders of Pacholder ("Pacholder Shareholders")
sold their shares in Pacholder thereby effecting a change in control of
Pacholder and of the Sub-Adviser;
WHEREAS, as a result of such change in control of the Sub-Adviser, the
Original Agreement was deemed to be assigned and therefore terminated and a
majority of the shareholders of the Fund were required to approve this Agreement
and the appointment of the Sub-Adviser for the Fund;
WHEREAS, on February 26, 2003, a majority of the shareholders of the Fund
approved this Agreement and the appointment of the Sub-Adviser; and
WHEREAS, the Investment Adviser desires to continue to retain the
Sub-Adviser to provide investment sub-advisory services to the Fund with regard
to corporate fixed-income securities and instruments which are rated below
investment grade or unrated corporate fixed-income securities of similar quality
(collectively, "High Yield Assets") and the Sub-Adviser is willing and believes
it possesses legal authority to make available such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. Retention. The Investment Adviser hereby retains the Sub-Adviser to
provide certain sub-investment advisory services set forth herein to it with
regard to investments by the Fund in High Yield Assets for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such retention and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Investment Adviser has furnished the
Sub-Adviser with copies properly certified or authenticated of each of the
following documents:
(a) the Trust's Amended and Restated Declaration of Trust, as filed
with the Secretary of State of the Commonwealth of Massachusetts on March
5, 1999, and all amendments thereto or restatements thereof (such
Declaration, as presently in effect and as it shall from time to time be
amended or restated, is herein called the "Declaration of Trust"):
(b) the Trust's Code of Regulations and amendments thereto;
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(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Sub-Adviser and approving this Agreement;
(d) the Trust's original Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange Commission on
February 20, 1985 and all amendments thereto;
(e) the Trust's current Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act"), and under the 1940 Act as
filed with the Securities and Exchange Commission and all amendments
thereto; and
(f) the Trust's most recent prospectus and Statement of Additional
Information relating to the Fund (such prospectus and Statement of
Additional Information, as presently in effect, and all amendments and
supplements thereto are herein collectively called the "Prospectus").
The Investment Adviser will promptly furnish the Sub-Adviser with copies of
all amendments of or supplements to the foregoing documents.
3. Management. Subject always to the instructions and supervision of the
Investment Adviser and the Trust's Board of Trustees, the Sub-Adviser will
provide a continuous investment program for High Yield Assets with respect to
those assets of the Fund that are designated by the Investment Adviser for
investment in High Yield Assets from time to time (the "Portfolio"), including
investment research and management with respect to all securities and
investments constituting High Yield Assets and cash equivalents related thereto.
Subject to any restrictions, instructions, or guidelines provided by either the
Fund or the Investment Adviser, the Sub-Adviser will determine from time to time
what High Yield Assets will be purchased, retained or sold by the Trust with
respect to the Portfolio and will place all purchase and sale orders on behalf
of the Fund with respect to the Portfolio. The Sub-Adviser will provide the
services under this Agreement in accordance with the Fund's investment
objective, policies and restrictions as stated in the Prospectus and resolutions
of the Trust's Board of Trustees. The Sub-Adviser further agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will comply in all material respects with all applicable Rules
and Regulations of the Securities and Exchange Commission and in addition
will conduct its activities under this Agreement in accordance with any
applicable regulations pertaining to the investment advisory activities of
the Sub-Adviser;
(c) will not make loans to any person to purchase or carry units of
beneficial interest ("Shares") in the Fund or make loans to the Trust;
(d) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers, the Sub-Adviser will attempt to
obtain prompt execution of orders in an effective manner at the most
favorable price. Consistent with this obligation, when the execution and
price offered by two or more brokers or dealers are comparable, the
Sub-Adviser may, in its discretion, purchase and sell portfolio securities
to and from brokers and dealers who provide the Sub-Adviser with research
advice and other services. In no instance will portfolio securities be
purchased from or sold to One Group Dealer Services, Inc., the Investment
Adviser, the Sub-Adviser or any affiliated person of either the Trust, One
Group Dealer Services, Inc., the Investment Adviser, or the Sub-Adviser,
except to the extent permitted by the 1940 Act;
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Fund and prior,
present or potential shareholders, and will not use such records and
information for any purpose other than in the performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be
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unreasonably withheld. The foregoing shall not apply to any information
that is publicly available when provided or thereafter becomes publicly
available other than through a breach of this Agreement, or that is
required or requested to be disclosed by the Securities and Exchange
Commission or any other regulatory examiner of the Sub-Adviser, any auditor
of the parties hereto, by judicial or administrative process or otherwise
by applicable law or regulation. Nothing herein shall restrict the
Sub-Adviser's ability to publish information regarding the performance of
accounts under its management; and
(f) will maintain its policy and practice of conducting its fiduciary
functions independently. In making investment recommendations for the Fund,
the Sub-Adviser's personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase or sale for the
Fund's account are customers of the Investment Adviser, the Sub-Adviser or
the parents or subsidiaries or affiliates of the Investment Adviser or
Sub-Adviser. In dealing with such customers, the Sub-Adviser and its
parent, subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held by the Trust.
4. Services Not Exclusive. The investment advisory services furnished by
the Sub-Adviser hereunder are not to be deemed exclusive. Except to the extent
necessary to perform the Sub-Adviser's obligations under this Agreement, nothing
herein shall be deemed to limit or restrict the right of the Sub-Adviser, or any
subsidiary or affiliate of the Sub-Adviser, or any employee of the Sub-Adviser,
to engage in any other business, whether of a similar or dissimilar nature, or
to render services of any kind to any other person.
5. Books and Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request;
provided, however, that the Sub-Adviser may retain copies of any or all such
records. The Sub-Adviser further agrees to preserve for the periods prescribed
by Rule 3la-2 under the 1940 Act all records which it maintains for the Fund
that are required to be maintained by Rule 3la-2 under the 1940 Act.
6. Expenses. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Trust. The Trust and the Investment Adviser will be
responsible for all of their respective expenses and liabilities.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the Investment Adviser will pay the Sub-Adviser and
the Sub-Adviser will accept as full compensation therefor a fee computed daily
and paid monthly in arrears on the first business day of each month at an annual
rate of sixty one-hundredths of one percent (.60%) of the Portfolio's average
daily net assets. The Sub-Adviser agrees to waive a portion of the sub-advisory
fee equal to the percentage of the investment advisory fee waived by the
Investment Adviser under the Investment Advisory Agreement between the Trust and
the Investment Adviser.
If the fee payable to the Sub-Adviser pursuant to this Section 7 begins to
accrue before the end of any month or if this Agreement terminates before the
end of any month, the fee for the period from such date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs. For purposes of
calculating fees, the value of the Portfolio's assets shall be computed in the
manner specified in the Prospectus and the Trust's Declaration of Trust for the
computation of the value of the Trust's net assets in connection with the
determination of the net asset value of the Trust's shares. Payment of said
compensation shall be the sole responsibility of the Investment Adviser and
shall in no way be an obligation of the Fund or of the Trust.
8. Limitation of Liability. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or fact or for any loss suffered by the
Trust or the Investment Adviser in connection with the performance of this
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Sub-Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
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9. Duration and Termination. This Agreement will become effective as of
the date first written above, provided that it shall have been approved by vote
of a majority of the outstanding voting securities of the Fund, in accordance
with the requirements under the 1940 Act, and, unless sooner terminated as
provided herein, shall continue in effect until November 30, 2003. Thereafter,
if not terminated, this Agreement shall continue in effect for successive
periods of twelve months each ending on November 30th of each year, provided
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not parties
to this Agreement or interested persons of the Trust, the Sub-Adviser, or the
Investment Adviser, cast in person at a meeting called for the purpose of voting
on such approval, and (b) by the vote of a majority of the Trust's Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, this Agreement may be terminated at any
time on sixty days' written notice, without the payment of any penalty, by the
Trust (by vote of the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund), by the Investment Adviser or by the
Sub-Adviser. This Agreement will immediately terminate in the event of its
assignment and upon termination of the Investment Advisory Agreement between the
Trust and the Investment Adviser. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
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.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by the laws
of the Commonwealth of Massachusetts.
The names 'One Group(R) Mutual Funds' and `Trustees of One Group(R) Mutual
Funds' refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under a Declaration of
Trust dated February 18, 1999 to which reference is hereby made and a copy of
which is on file at the office of the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of `One Group(R) Mutual
Funds' entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, Shareholders or representatives of the
Trust personally, but bind only the assets of the Trust, and all persons dealing
with any series of Shares of the Trust must look solely to the assets of the
Trust belonging to such series for the enforcement of any claims against the
Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
BANC ONE INVESTMENT ADVISORS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
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BANC ONE HIGH YIELD PARTNERS, LLC
BY: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Title: Vice President - Portfolio Manager
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One Group Mutual Funds hereby acknowledges
and agrees to the provisions of paragraph
3(e) of this Agreement.
ONE GROUP MUTUAL FUNDS
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Title: President
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