Exhibit (d)(6)
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of the 16th day of October, 2002, between AmSouth
Investment Management Company, LLC, a corporation with its principal place of
business in Alabama (herein called the "Investment Adviser") and Dimensional
Fund Advisors Inc., a corporation with its principal place of business in
California (herein called the "Sub-Adviser").
WHEREAS, the Investment Adviser is the investment adviser to AmSouth Funds,
a Massachusetts business trust (herein called the "Trust"), an open-end
management investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Investment Adviser wishes to retain the Sub-Adviser to assist
the Investment Adviser in providing investment advisory services in connection
with such portfolios of the Trust as now or hereafter may be identified on
Schedule A hereto as such Schedule may be amended from time to time with the
consent of the parties hereto (each herein called a "Fund").
WHEREAS, the Sub-Adviser is willing to provide such services to the
Investment Adviser upon the terms and conditions and for the compensation set
forth below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. APPOINTMENT. The Investment Adviser hereby appoints the Sub-Adviser
its sub-adviser with respect to the Fund and the Sub-Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided. In the performance of its duties hereunder, the
Sub-Adviser is and shall be an independent contractor and except as otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Trust, the Fund or the Investment Adviser
in any way or otherwise be deemed to be an agent of the Trust, the Fund or the
Investment Adviser.
2. DELIVERY OF DOCUMENTS. The Investment Adviser shall furnish to the
Sub-Adviser copies of the following documents:
(a) The Declaration of Trust of the Trust as in effect on the date
hereof;
(b) The By-laws of the Trust as in effect on the date hereof;
(c) The resolutions of the Board approving the engagement of the
Sub-Adviser as sub-adviser for the Fund and approving the form of this
Agreement;
(d) The resolutions of the Board selecting the Investment Adviser as
investment adviser to the Fund and approving the form of the Investment Advisory
Agreement with the Trust, on behalf of the Fund;
(e) The Investment Advisory Agreement with the Trust, on behalf of
the Fund;
(f) Current copies of the registration statement, Prospectus and
Statement of Additional Information of the Trust relating to the Fund;
(g) Resolutions, policies and procedures adopted by the Board in
respect of the management or operation of the Fund; and
(h) A list of affiliated brokers and underwriters and other
affiliates for compliance with applicable provisions of the Investment Company
Act.
The Investment Adviser shall furnish the Sub-Adviser from time to time
with copies, properly certified or otherwise authenticated, of all amendments of
or supplements to the foregoing, if any. Such amendments or supplements as to
Items (a) through (h) above shall be provided within 30 days of the times such
materials became available to the Investment Adviser and, until so provided, the
Sub-Adviser may continue to rely on those documents previously provided. With
respect to Items (g) and (h) above, the Sub-Adviser shall have a reasonable
amount of time, giving due consideration to the nature of the information so
provided, to process such information before it becomes effective as to the
Sub-Adviser.
3. SUB-ADVISORY SERVICES TO THE FUNDS.
(a) Subject to the supervision of the Investment Adviser, the
Sub-Adviser will provide a continual investment program for such portion, if
any, of the Fund's assets, that is allocated to the Sub-Adviser by the
Investment Adviser from time to time. With respect to such assets, the
Sub-Adviser will: (i) make investment decisions with respect to the investment
and re-investment of the Fund's assets; (ii) place orders for all purchases and
sales of the investments made for the Fund; (iii) maintain the books and records
required in connection with its duties hereunder; and (iv) keep the Investment
Adviser informed of developments materially affecting the Fund. The Investment
Adviser shall retain direct portfolio management responsibility with respect to
any assets of the Fund which are not allocated by it to the portfolio management
of the Sub-Adviser.
(b) The Sub-Adviser 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; provided that, notwithstanding this
Paragraph 3(b), the liability of the Sub-Adviser for actions taken and
non-actions with respect to the performance of services under this Agreement
shall be subject to the limitations set forth in Paragraph 11(a) of this
Agreement.
(c) The Sub-Adviser will communicate to the Trust's custodian and
Fund accountants as instructed by the Investment Adviser on each day that a
purchase or sale of a security is effected for the Fund (i) the name of the
issuer, (ii) the amount of the purchase or sale, (iii) the name of the broker or
dealer, if any, through which the purchase or sale will be affected, (iv) the
CUSIP or SEDOL number of the security, if any, and (v) such other information
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as the Investment Adviser may reasonably require for purposes of fulfilling its
obligations to the Trust under the Advisory Agreement.
(d) The Sub-Adviser will provide the services rendered by it
hereunder in accordance with the Fund's investment objectives, policies and
restrictions as stated in the Prospectus and Statement of Additional
Information, and such other guidelines as the Board of Trustees of the Trust
("Board") may establish and which are provided to the Sub-Adviser in accordance
with Section 2 of this Agreement.
(e) The Sub-Adviser will maintain records of the information set
forth in Paragraph 3(c) hereof with respect to the securities transactions of
the Fund and will furnish the Trust's Board of Trustees with such periodic and
special reports as the Board may reasonably request.
(f) After each month-end, the Sub-Adviser will promptly review all
(1) reports of current security holdings in the Fund, (2) summary reports of
transactions and pending maturities (including the principal, cost and accrued
interest on each portfolio security in maturity date order) and (3) current cash
position reports (including cash available from portfolio sales and maturities
and sales of the Fund's shares less cash needed for redemptions and settlement
of portfolio purchases), all within a reasonable time after receipt thereof from
the Trust and will report any errors or discrepancies in such reports to the
Trust or its designee within three (3) business days after discovery of such
discrepancies.
(g) At such times as reasonably requested by the Board or the
Investment Adviser, the Sub-Adviser will provide economic and investment
analysis and reports, and make available to the Board and the Investment Adviser
such economic, statistical, or investment services normally available to similar
investment company clients of the Sub-Adviser.
(h) The Sub-Adviser will make its portfolio managers and other
appropriate personnel available to the Board and the Investment Adviser at
reasonable times to review the Fund's investment policies and to consult with
the Board and the Investment Adviser regarding the investment affairs of the
Fund, including economic and statistical and investment matters relevant to the
Sub-Adviser's duties hereunder, and the portfolio strategies employed.
(i) The Sub-Adviser will provide the Investment Adviser with
quarterly compliance reports and certifications in the forms reasonably
requested by the Investment Adviser.
(j) The Sub-Adviser will provide the Trust with reasonable evidence
that, with respect to its activities on behalf of the Fund, the Sub-Adviser is
maintaining (i) adequate fidelity bond insurance; and (ii) an appropriate Code
of Ethics and related reporting procedures.
4. BROKERAGE. The Sub-Adviser may place orders pursuant to its investment
determinations for the Fund either directly with the issuer or with any broker
or dealer. In placing orders, the Sub-Adviser will consider the factors it deems
relevant, including, as applicable, the experience and skill of the firm's
securities traders, as well as the firm's financial responsibility and
administrative efficiency. The Sub-Adviser will use its best efforts to obtain
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the best price and the most favorable execution of its orders. Consistent with
these obligations, and in selecting a broker to execute a particular
transaction, the Sub-Adviser may consider the brokerage and research services
provided to the Fund and other accounts over which the Sub-Adviser exercises
investment discretion. A commission paid to such brokers may be higher than that
which another qualified broker would have charged for effecting the same
transaction, provided that the Sub-Adviser determines in good faith that the
amount of such commission is reasonable in relation to the value of the
brokerage or research services provided, viewed either in terms of a particular
transaction or the overall responsibility of the Sub-Adviser to the Fund and its
other clients. Compensation received by the Sub-Adviser pursuant to this
Agreement shall not be reduced by any benefits received by the Sub-Adviser
pursuant to this section. The Sub-Adviser may direct brokerage to whomever it
deems appropriate consistent with the foregoing. In no instance will portfolio
securities be purchased from or sold to the Trust's principal distributor, the
Investment Adviser or any affiliate thereof (as the term "affiliate" is defined
in the 1940 Act), except to the extent permitted by Securities and Exchange
Commission ("SEC") exemptive order or by applicable law.
5. COMPLIANCE WITH LAWS; CONFIDENTIALITY; CONFLICTS OF INTEREST.
(a) The Sub-Adviser agrees that it will comply with all applicable
laws, rules and regulations of all federal and state regulatory agencies having
jurisdiction over the Sub-Adviser in performance of its duties hereunder (herein
called the "Rules").
(b) The Sub-Adviser will treat confidentially and as proprietary
information of the Trust all records and information relative to the Trust and
prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except (i) after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply; (ii) after notification to the Investment
Adviser or Trust, in response to regulatory inspection requests or other
regulatory inquiries or (iii) when so requested by the Investment Adviser or the
Trust.
(c) It is understood that any non-public information or non-public
recommendation supplied by the Sub-Adviser in connection with the performance of
its obligations hereunder is to be regarded as confidential and for use only by
the Investment Adviser, Trust or such persons as the Investment Adviser may
designate in connection with the business of the Fund.
6. CONTROL BY TRUST'S BOARD OF TRUSTEES. Any recommendations concerning
the Fund's investment program proposed by the Sub-Adviser to the Fund and the
Investment Adviser pursuant to this Agreement, as well as any other activities
undertaken by the Sub-Adviser on behalf of the Fund pursuant thereto shall at
all times be subject to any applicable directives of the Board of Trustees of
the Trust.
7. SERVICES NOT EXCLUSIVE. The Sub-Adviser's services hereunder are not
deemed to be exclusive, and the Sub-Adviser shall be free to render similar or
dissimilar services to others. The Investment Adviser understands, and has
advised the Trust's Board of Trustees, that the Sub-Adviser now acts, and may in
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the future act, as an investment adviser to fiduciary and other managed
accounts, and as investment adviser, sub-investment adviser, and/or
administrator to other investment companies. The Investment Adviser has no
objection to the Sub-Adviser's acting in such capacities, provided that whenever
the purchase or sale of securities or other investments of the same issuer may
be deemed by the Sub-Adviser to be suitable for two or more Funds, investment
companies or accounts managed by the Sub-Adviser, the available securities or
investments will be allocated in a manner believed by the Sub-Adviser to be
equitable to each of them. It is recognized and acknowledged by the Investment
Adviser that in some cases this procedure may adversely affect the price paid or
received by the Fund or the size of the position obtained for or disposed of by
the Fund. In addition, the Investment Adviser understands, and has advised the
Trust's Board of Trustees, that the persons employed by the Sub-Adviser to
assist in the Sub-Adviser's duties under this Agreement will not devote their
full time to such service and nothing contained in this Agreement will be deemed
to limit or restrict the right of the Sub-Adviser or any of its affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
8. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, and any other applicable Rule, 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 such records upon the
Trust's request. The Sub-Adviser further agrees to preserve, for the periods
prescribed by Rule 31a-2 under the 1940 Act and any other applicable Rule, the
records required to be maintained by the Sub-Adviser hereunder pursuant to Rule
31a-1 under the 1940 Act and any other applicable Rule.
9. EXPENSES. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with the performance of its services
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Fund. Notwithstanding the foregoing, the
Sub-Adviser shall not bear expenses related to the operation of the Trust or any
Fund including, but not limited to, taxes, interest, brokerage fees and
commissions and any extraordinary expense items.
10. 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 equal to the
lesser of (i) the fee at the applicable annual rates set forth on Schedule A
hereto or (ii) such fee as may from time to time be agreed upon in writing by
the Investment Adviser and the Sub-Adviser. If the fee payable to the
Sub-Adviser pursuant to this paragraph begins to accrue after the beginning 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 a Fund's net assets shall be computed in the manner specified in the
Prospectus and the Statement of Additional Information for the computation of
the value of the Fund's net assets in connection with the determination of the
net asset value of the Fund'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.
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11. LIMITATION OF LIABILITY.
(a) The Sub-Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Investment Adviser, the Trust or
the Fund in connection with the matters to which this Agreement relates, except
that Sub-Adviser shall be liable to the Investment Adviser for a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of
Sub-Adviser in the performance of its duties or from reckless disregard by it of
its obligations or duties under this Agreement. In no case shall the Sub-Adviser
be liable for actions taken or non-actions with respect to the performance of
services under this Agreement based upon specific information, instructions or
requests given or made to the Sub-Adviser by the Investment Adviser.
(b) The Investment Adviser shall be responsible at all times for
supervising the Sub-Adviser, and this Agreement does not in any way limit the
duties and responsibilities that the Investment Adviser has agreed to under the
Advisory Agreement.
12. DURATION AND TERMINATION. This Agreement shall become effective as of
the date hereof provided that it shall have been approved (a) by a vote of a
majority of the members of the Board who are not parties to this Agreement or
interested persons of the Trust, the Investment Adviser or the Sub-Adviser
("Independent Trustees"), cast in person at a meeting called for the purposes of
voting on such approval; and (b) by a vote of a majority of the outstanding
voting securities of the Fund. Unless sooner terminated as provided herein, this
Agreement shall continue with respect to the Fund until [ ]. Thereafter, if not
terminated, this Agreement shall continue in effect for successive 12-month
periods ending on [ ] of each year, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board or by vote of a majority of the outstanding
voting securities of the Fund; provided, however, that this Agreement may be
terminated with respect to the Fund (i) by the Trust at any time without the
payment of any penalty by the Board, (ii) by vote of a majority of the
outstanding voting securities of the Fund, (iii) by the Investment Adviser on 60
days written notice to the Sub-Adviser or (iv) by the Sub-Adviser on 60 days
written notice to the Investment Adviser. Any notice of termination served on
the Sub-Adviser by the Trust or the Investment Adviser shall be without
prejudice to the obligation of the Sub-Adviser to complete transactions already
initiated or acted upon with respect to the Fund. This Agreement will also
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities",
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.)
13. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought.
14. NOTIFICATION OF INVESTMENT ADVISER. The Sub-Adviser will promptly
notify the Investment Adviser in writing of the occurrence of any of the
following events: (a) the Sub-Adviser shall fail to be registered as an
investment adviser under the Investment Advisers Act of 1940, as amended; (b)
the Sub-Adviser shall have been served or otherwise have notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, public board or body, involving the affairs of the Fund or the Trust;
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or (c) any other occurrence that reasonably could have a material adverse impact
on the ability of the Sub-Adviser to provide the services provided for in this
Agreement.
15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
16. PRIVACY POLICY. The Sub-Adviser acknowledges that nonpublic customer
information (as defined in Regulation S-P, including any amendments thereto) of
customers of the Fund received from the Investment Adviser is subject to the
limitations on redisclosure and reuse set forth in Section 248.11 of Regulation
S-P, and agrees that such information: (i) shall not be disclosed to any third
party for any purpose without the written consent of the Investment Adviser
unless permitted by exceptions set forth in Sections 248.14 or 248.15 of
Regulation S-P; and (ii) shall be safeguarded pursuant to procedures adopted
under Section 248.30 of Regulation S-P if so required.
17. REFERENCES TO THE INVESTMENT ADVISER AND SUB-ADVISER. During the term
of this Agreement, each party agrees to furnish to the other party at its
principal office all prospectuses, proxy statements, reports to stockholders,
sales literature or other material prepared for distribution to sales personnel,
shareholders of the Trust or the public, which refer to the other party or its
clients in any way, prior to use thereof and not to use such material if the
other party reasonably objects in writing five business days (or such other time
as may be mutually agreed upon) after receipt thereof. Sales literature may be
furnished to the other party by first-class or overnight mail, facsimile
transmission equipment or hand delivery.
18. CLIENT SUITABILITY. The Investment Adviser understands and agrees that
the Sub-Adviser, as part of its duties hereunder, is not responsible for
determining whether or not the Fund is suitable and appropriate investments for
the clients who invest in such.
19. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any 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 effected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties herein and their respective successors and shall be governed by
Massachusetts law.
The names "AmSouth Funds" and "Trustees of AmSouth Funds" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Agreement and Declaration of Trust dated as of November 23, 1999 to
which reference is hereby made and a copy of which is on file at the office of
the Secretary of State 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 "AmSouth 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
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for the enforcement of any claims against the Trust.
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.
(SEAL) AMSOUTH INVESTMENT MANAGEMENT
COMPANY, LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Title: Chairman
(SEAL) DIMENSIONAL FUND ADVISORS INC.
By: /s/ Xxxxxxx Xxxxx
-----------------
Title: Vice President
---------------
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Dated: October 16, 2002
SCHEDULE A
To Sub-Advisory Agreement
dated as of October 16, 2002
between AmSouth Investment Management Company, LLC
and Dimensional Fund Advisors Inc.
NAME OF FUND ANNUAL FEE AS A PERCENTAGE OF
------------ ------------------------------
AVERAGE DAILY NET ASSETS
------------------------
AmSouth International Equity Fund 0.40% on the first $40 million of
average aggregate daily net assets
and 0.20% on assets in excess of
$40 million
Consented to by:
Date: _______________ AMSOUTH INVESTMENT MANAGEMENT
COMPANY, LLC
By: /s/ Xxxxxx X. Xxxxxxx
Date: 10/16/02 DIMENSIONAL FUND ADVISORS INC.
By: /s/ Xxxxxxx Xxxxx, Vice President
---------------------------------
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