EX-99.B(d)tgtsubadv2
INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT, made as of this ___ day of _______, 2003, by and
between Xxxxxxx & Xxxx Investment Management Company, a Kansas corporation
registered as an Investment Adviser under the Investment Advisers Act of
1940 (the "Adviser") and Xxxxxxxxx Investment Counsel, Inc., a Florida
corporation registered as an Investment Adviser under the Investment
Advisers Act of 1940 (the "Sub-Adviser").
WHEREAS, the Adviser is the Investment Adviser to W&R Target Funds,
Inc. (the "Fund"), an open-end diversified management investment company
organized as a series fund, registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it
with portfolio selection and related research and statistical services in
connection with the Adviser's investment advisory activities on behalf of
the Fund's International II Portfolio, and the Sub-Adviser desires to
furnish such services to the Adviser;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. Appointment of Sub-Adviser
The Adviser hereby appoints the Sub-Adviser to perform portfolio
selection services described herein for investment and reinvestment of the
Fund's International II Portfolio, subject to the control and direction of
the Fund's Board of Directors, for the period and on the terms hereinafter
set forth. The Sub-Adviser accepts such appointment and agrees to furnish
the services hereinafter set forth for the compensation herein provided.
The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or
authorized, have no authority to act for or represent the Fund or the
Adviser in any way or otherwise be deemed an agent of the Fund or the
Adviser.
2. Obligations of and Services to be Provided by the Sub-Adviser
(a) The Sub-Adviser shall provide the following services and
assume the following obligations with respect to the Fund's
International II Portfolio:
(1) The investment of the assets of the International II
Portfolio shall at all times be subject to the applicable
provisions of the Articles of Incorporation, the Bylaws, the
Registration Statement, the current Prospectus and the
Statement of Additional Information of the Fund and shall
conform to the investment objectives, policies and
restrictions of the International II Portfolio as set forth
in such documents and as interpreted from time to time by the
Board of Directors of the Fund and by the Adviser. Within the
framework of the investment objectives, policies and
restrictions of the International II Portfolio, and subject
to the supervision of the Adviser, the Sub-Adviser shall have
the sole and exclusive responsibility for the making and
execution of all investment decisions for the International
II Portfolio.
(2) In carrying out its obligations to manage the investments and
reinvestments of the assets of the International II
Portfolio, the Sub-Adviser shall: (1) obtain and evaluate
pertinent economic, statistical, financial and other
information affecting the economy generally and individual
companies or industries the securities of which are included
in the International II Portfolio or are under consideration
for inclusion therein; (2) formulate and implement a
continuous investment program for the International II
Portfolio consistent with the investment objective and
related investment policies for such Portfolio as set forth
in the Fund's registration statement, as amended; and (3)
take such steps as are necessary to implement the
aforementioned investment program by purchase and sale of
securities including the placing, or directing the placement
through an affiliate of the Sub-Adviser, of orders for such
purchases and sales.
(3) In connection with the purchase and sale of securities of the
Fund's International II Portfolio, the Sub-Adviser shall
arrange for the transmission to the Adviser and the Custodian
for the Fund on a daily basis such confirmation, trade
tickets and other documents as may be necessary to enable
them to perform their administrative responsibilities with
respect to the Fund's International II Portfolio. With
respect to portfolio securities to be purchased or sold
through the Depository Trust Company, the Sub-Adviser shall
arrange for the automatic transmission of the I.D.
confirmation of the trade to the Custodian of the Portfolio,
UMB Bank, N.A. The Sub-Adviser shall render such reports to
the Adviser and/or to the Fund's Board of Directors
concerning the investment activity and portfolio composition
of the Fund's International II Portfolio in such form and at
such intervals as the Adviser or the Board may from time to
time require.
(4) The Sub-Adviser shall, in the name of the Fund, place or
direct the placement of orders for the execution of portfolio
transactions in accordance with the policies with respect
thereto, as set forth in the Fund's Registration Statement,
as amended from time to time, and under the 1933 Act and the
1940 Act. In connection with the placement of orders for the
execution of the Fund's portfolio transactions, the Sub-
Adviser shall create and maintain all necessary brokerage
records of the Fund in accordance with all applicable law,
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 Fund and shall be available for
inspection and use by the Securities and Exchange Commission,
the Fund or any person retained by the Fund. Where
applicable, such records shall be maintained by the Sub-
Adviser for the period and in the place required by Rule 31a-
2 under the 1940 Act.
(5) In placing orders or directing the placement of orders for
the execution of portfolio transactions, the Sub-Adviser
shall select brokers and dealers for the execution of the
International II Portfolio's transactions. In selecting
brokers or dealers to execute such orders, the Sub-Adviser is
expressly authorized to consider the fact that a broker or
dealer has furnished statistical, research or other
information or services which enhance the Sub-Adviser's
investment research and portfolio management capability
generally. It is further understood in accordance with
Section 28(e) of the Securities Exchange Act of 1934, as
amended, that the Sub-Adviser may negotiate with and assign
to a broker a commission which may exceed the commission
which another broker would have charged for effecting the
transaction if the Sub-Adviser determines in good faith that
the amount of commission charged was reasonable in relation
to the value of brokerage and/or research services (as
defined in Section 28(e)) provided by such broker, viewed in
terms either of the Portfolio or the Sub-Adviser's overall
responsibilities to the Sub-Adviser's discretionary accounts.
(b) The Sub-Adviser shall use the same skill and care in
providing services to the Fund as it uses in providing services
to fiduciary accounts for which it has investment responsibility.
The Sub-Adviser will conform with all applicable rules and
regulations of the Securities and Exchange Commission.
3. Expenses
During the terms of this Agreement, the Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this
Agreement.
4. Compensation
In payment for the investment sub-advisory services to be rendered
by the Sub-Adviser in respect of the International II Portfolio hereunder,
the Adviser shall pay to the Sub-Adviser as full compensation for all
services hereunder a fee computed at an annual rate which shall be a
percentage of the average daily value of the net assets of the
International II Portfolio. The fee shall be accrued daily and shall be
based on the net asset values of all of the issued and outstanding shares
of the International II Portfolio as determined as of the close of each
business day pursuant to the Articles of Incorporation, Bylaws and
currently effective Prospectus and Statement of Additional Information of
the Fund. The fee shall be payable in arrears on the last day of each
calendar month.
The amount of such annual fee, as applied to the average daily
value of the net assets of the International II Portfolio shall be as
described in the schedule below:
Assets Fee
On the first $10 million in assets 0.70%
On the next $15 million in assets 0.65%
On the next $25 million in assets 0.55%
On the next $50 million in assets 0.50%
On all assets exceeding $100 million 0.40%
Notwithstanding the schedule described above, there shall be a
minimum annual fee paid by the Adviser to the Sub-Adviser which shall be
$75,000.
5. Renewal and Termination
This Agreement shall continue in effect for a period not more than two
years from the date of this Agreement, only so long as such continuance is
specifically approved at least annually by a vote of the holders of the
majority of the outstanding voting securities of the Fund's International
II Portfolio, or by a vote of the majority of the Fund's Board of
Directors. And further provided that such continuance is also approved
annually by a vote of the majority of the Fund's Board of Directors who are
not parties to this Agreement or interested persons of parties hereto, cast
in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time without payment of penalty:
(i) by the Fund's Board of Directors or by a vote of a majority of the
outstanding voting securities of the class of capital stock of the Fund's
International II Portfolio on sixty days' prior written notice, or (ii) by
either party hereto upon sixty days' prior written notice to the other.
This Agreement will terminate automatically upon any termination of the
Investment Advisory Agreement between the Fund and the Adviser or in the
event of its assignment. The terms "interested person," "assignment" and
"vote of a majority of the outstanding voting securities" shall have the
meanings set forth in the 1940 Act.
6. General Provisions
(a) The Sub-Adviser may rely on information reasonably believed
by it to be accurate and reliable. Except as may otherwise be
provided by the 1940 Act, neither the Sub-Adviser nor its
officers, directors, employees or agents shall be subject to any
liability for any error of judgment or mistake of law or for any
loss arising out of any investment or other act or omission in
the performance by the Sub-Adviser of its duties under this
Agreement or for any loss or damage resulting from the imposition
by any government or exchange control restrictions which might
affect the liquidity of the International II Portfolio's assets,
or from acts or omissions of custodians or securities
depositories, or from any war or political act of any foreign
government to which such assets might be exposed, provided that
nothing herein shall be deemed to protect, or purport to protect,
the Sub-Adviser against any liability to the Fund or to its
shareholders to which the Sub-Adviser would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence
in the performance of its duties hereunder, or by reason of the
Sub-Adviser's reckless disregard of its obligations and duties
hereunder.
(b) The Adviser and the Fund's Board of Directors understand
that the value of investments made for the Account may go up as
well as down, is not guaranteed and that investment decisions
will not always be profitable. The Adviser has not made and is
not making any guarantees, including any guarantee as to any
specific level of performance of the Portfolio. The Adviser and
the Fund's Board of Directors acknowledge that this Portfolio is
designed for investors seeking international diversification and
is not intended as a complete investment program. They also
understand that investment decisions made on behalf of the
Portfolio by Sub-Adviser are subject to various market and
business risks, and that investing in securities of companies in
emerging countries involves special risks which are not typically
associated with investing in U.S. companies. Risks include but
are not limited to, foreign currency fluctuations, investment and
repatriation restrictions, and political and social instability.
Although the Sub-Adviser intends to invest in companies located
in countries which the Sub-Adviser considers to have relatively
stable and friendly governments, the Fund's Board of Directors
accepts the possibility that countries in which the Sub-Adviser
invests may expropriate or nationalize properties of foreigners,
may impose confiscatory taxation or exchange controls, including
suspending currency transfers from a given country, or may be
subject to political or diplomatic developments that could affect
investments in those countries.
(c) This Agreement shall not become effective unless and until
it is approved by the Board of Directors of the Fund, including a
majority of the members who are not "interested persons" to
parties to this Agreement, by a vote cast in person at a meeting
called for the purpose of voting such approval, and by a majority
of the outstanding voting securities of the class of capital
stock of the Fund's International II Portfolio.
(d) The Adviser understands that the Sub-Adviser now acts, will
continue to act, or may act in the future, as investment adviser
to fiduciary and other managed accounts, including other
investment companies, and the Adviser has no objection to the
Sub-Adviser so acting, provided that the Sub-Adviser duly
performs all obligations under this Agreement. The Adviser also
understands that the Sub-Adviser may give advice and take action
with respect to any of its other clients or for its own account
which may differ from the timing or nature of action taken by the
Sub-Adviser with respect to the Fund. Nothing in this Agreement
shall impose upon the Sub-Adviser any obligation to purchase or
sell or to recommend for purchase or sale, with respect to the
Fund, any security which the Sub-Adviser or its shareholders,
directors, officers, employees or affiliates may purchase or sell
for its or their own account(s) or for the account of any other
client.
(e) Except to the extent necessary to perform its obligations
hereunder, nothing herein shall be deemed to limit or restrict
the right of the Sub-Adviser, or the right of any of its
officers, directors or employees who may also be an officer,
director or employee of the Fund, or persons otherwise affiliated
with the Fund (within the meaning of the 0000 Xxx) to engage in
any other business or to devote time and attention to the
management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind
to any other trust, corporation, firm, individual or association.
(f) Each party agrees to perform such further acts 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
Minnesota. 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.
(g) Any notice under this Agreement shall be in writing,
addressed and delivered or mailed postage pre-paid to the
appropriate party at the following address: The Adviser and the
Fund at 0000 Xxxxx Xxxxxx, X.X. Xxx 00000, Xxxxxxx Xxxxxxx,
Xxxxxx, 00000-0000, and the Sub-Adviser at 000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxx Xxxxxxxxxx, Xxxxxxx 00000.
(h) Sub-Adviser agrees to notify Adviser of any change in Sub-
Adviser's officers and directors within a reasonable time after
such change.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
XXXXXXX & XXXX INVESTMENT MANAGEMENT COMPANY
By: ____________________________
Its:____________________________
XXXXXXXXX INVESTMENT COUNSEL, INC.
By: ____________________________
Its:____________________________
