INVESTMENT SUB-ADVISORY AGREEMENT
(INTERNATIONAL BOND PORTFOLIO)
THIS AGREEMENT, made as of the 11th day of January, 2007, by
and between Advantus Capital Management, Inc., a Minnesota corporation,
registered as an Investment Adviser under the Investment Advisers
Act of 1940 (the Adviser) and Augustus Asset Managers Limited, a
UK company, authorized and regulated by the Financial Services
Authority (FSA) and registered as an Investment Adviser under
the Investment Advisers Act of 1940 (the Sub-Adviser).
WHEREAS, the Adviser is the Investment Adviser to Advantus
Series Fund, 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);
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 Advisers investment
advisory activities on behalf of the Funds International Bond
Portfolio (hereinafter Portfolio), and the Sub-Adviser desires
to furnish such services to the Adviser; and
WHEREAS, the Sub-Adviser has classified the Adviser as
an Intermediate Customer in accordance with the rules of the FSA
and by execution of this Agreement the Adviser hereby acknowledges
such classification.
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
In accordance with and subject to the Investment Advisory Agreement
between the Fund and the Adviser, the Adviser hereby appoints the
Sub-Adviser to perform portfolio selection services described herein
for the investment and reinvestment of the Portfolio, subject to the
control and direction of the Funds 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 described herein. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor and shall,
except as expressly provided or authorized herein, 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 SUB-ADVISER
(a) The Sub-Adviser shall provide the following services and assume
the following obligations with respect to the Portfolio of the Fund:
(1) Investment Plan
In carrying out its obligations to manage the investments and
reinvestments of the assets of the Portfolio, the Sub-Adviser shall:
(i) 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
Portfolio or are under consideration for inclusion therein;
(ii) formulate and implement a continuous investment program for the
Portfolio consistent with the investment objective and related
investment policies for such Portfolio; and
(iii) take such steps as are necessary to implement the aforementioned
investment program by purchase and sale of securities, including
financial futures contracts and currency exchange transactions, including
the placing of orders for such purchases and sales.
(2) Investment Objectives, Policies, Practices and Restrictions
(i) The investment of the assets of the 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 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, including diversification of
the holdings of the Portfolio as a segregated asset account in accordance
with Section 817 of the Internal Revenue Code, as amended (the Code), and
Regulation Section 1.817-5 thereunder, provided that Adviser shall be
responsible for ensuring that the Fund as a whole is adequately diversified
if and to the extent required by Section 817(h) of the Code and
Regulation 1.817-5 thereunder.
(ii) Within the framework of the investment objectives, policies and
restrictions of the Portfolio, and subject to the supervision of the
Adviser, the Sub-Adviser shall formulate and implement an overall
continuing program for managing the investment of the assets of the
Portfolio, and shall amend and update such program from time to time
as financial and other economic conditions warrant.
(iii) Adviser agrees to promptly inform the Sub-Adviser, in writing,
of any changes in such documents or interpretations which may affect
the Sub-Advisers services hereunder, it being understood that such
changes will be effective with respect to the Sub-Adviser upon the
Sub-Advisers receipt of such notice, provided, however, that Sub-Advisor
shall have a reasonable period to effect any necessary portfolio changes
to bring the assets into compliance with such changes or interpretations.
(3) Cash Management and Short-Term Investment Funds
(i) The Adviser shall arrange with the custodian of the Portfolio
(Custodian) to have two Short-Term Investment Funds (STIFs) available
to be used as sweep vehicles for the short-term investment of cash for
the Portfolio. The Sub-Adviser agrees to use these STIFs for the
short-term investment of cash, subject to the limitations on investments
in shares of other investment companies set forth in the 1940 Act.
(ii) In addition, the Sub-Adviser agrees that the management of cash is
the Sub-Advisers responsibility, and agrees that cash will be managed
in full compliance with any applicable restrictions, including the
limitations on investments in shares of other investment companies
set forth in the 0000 Xxx.
(4) Electronic Delivery of Daily Trade File and Daily Holdings
(i) In connection with the purchase and sale of securities of the Portfolio,
the Sub-Adviser shall deliver to the Adviser by no later than noon Central
Time on trading day, a trade file with respect to securities, including
financial futures contracts and currency exchange transactions, purchased
or sold on such trading day, if any, using a secure electronic system
established by Adviser, and confirmations, if customarily provided by
counterparties, relating to each transaction executed for the Portfolio.
(ii) Using a secure electronic system established by Adviser, Sub-Adviser
will deliver to Adviser by no later than noon Central Time on trade date
plus one, a complete list of investments held by the Portfolio on a daily
basis. Sub-Adviser agrees to reconcile these holdings with the Custodian
on a monthly basis.
(iii) Revisions to or cancellations of trades must be provided by
Sub-Adviser to Adviser using a secure electronic system established
by Adviser by no later than 2:00 p.m. Central Time on trade date plus one.
If a revision or cancellation is made after this deadline, Sub-Adviser will
promptly notify Adviser using a secure electronic system established
by Adviser.
(5) Investment in New Securities
(i) Sub-Adviser further agrees to provide ongoing security
related information as is necessary (including, but not limited
to payment discrepancies).
(6) Trade Affirmation and Settlement
(i) The Sub-Adviser shall affirm and direct the Custodian to settle
each trade made by the Sub-Adviser on behalf of the Account and
shall advise brokers to list Adviser as an Interested Party on all
Depository Trust Company (DTC) confirms, supplying Advisers DTC
number as 71567. Sub-Adviser agrees that all trades will be affirmed
by the Sub-Adviser by no later than 11:00 a.m. Central Time on trade
date plus one.
(ii) With respect to portfolio securities to be purchased or sold
through DTC, the Sub-Adviser shall arrange for the automatic transmission
of the I.D. confirmation of the trade to the Custodian of the Portfolio.
For non-DTC eligible trades, Sub-Adviser will provide hard copy
confirmation, if customarily provided, via facsimile or e-mail to
Adviser by no later than 11:00 a.m. Central Time on trade date plus one.
(iii) Sub-Adviser will work directly with Custodian and/or any applicable
broker to resolve any trade-related issues (including, but not limited
to re-registration of physical certificates, denominational breakdowns,
exchanges, etc.).
(iv) Sub-Adviser agrees to monitor any failing trades and to use its
best efforts to work proactively to resolve these issues, and seek
reimbursement from third parties as appropriate. JBIL agrees to
reimburse the Portfolio for any compensating interest due because of
failing trades if due to the fault of JBIL or if JBIL fails to use
its best efforts to seek reimbursement from third parties.
(7) Corporate Actions
(i) Sub-Adviser will work with appropriate parties to facilitate
voluntary corporate action processing;
(ii) Sub-Adviser will notify Adviser of any voluntary corporate
actions and the specific actions that will be taken; and
(iii) Sub-Adviser will provide appropriate details related to all
corporate actions, including any accounting data needed.
(8) Proxy Voting
Adviser is responsible for voting all proxies on behalf of the securities
held by the Portfolio in accordance with proxy voting policies and
procedures adopted by the Fund. Sub-adviser shall consult with Adviser
as requested by Adviser on proxy voting matters.
(9) Securities Lending
The Adviser may have entered into, prior to the existence of this agreement,
or may, at some point during the existence of this Agreement enter into a
securities lending agreement with the Custodian or another party to have the
securities of the Portfolio placed on loan for a fee. If the Adviser does
enter into such agreement, the Adviser will notify the Sub-Adviser of
such agreement. The Adviser agrees not to enter into such agreement
without the counterparty agreeing to contractual settlement, thereby
guaranteeing the return of any securities on loan when requested by
the Custodian in connection with settlements of transactions initiated
by Sub-Adviser. If requested by Sub-Adviser, and as permitted by the
relevant securities lending agreements, Adviser will instruct a buy-in
against a borrower which has failed to redeliver securities to the Portfolio.
(10) Directed Brokerage
Sub-Adviser understands that Adviser may, on occasion, enter into agreements
for directed brokerage with certain brokers. Sub-Adviser agrees to follow
Advisers direction regarding directed brokerage.
(11) Broker Selection
Except as provided in paragraph 10 above, 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 Portfolios 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-Advisers 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-Advisers overall
responsibilities to the Sub-Advisers discretionary accounts.
(12) Availability and Retention of Records
The Sub-Adviser shall, in the name of the Portfolio, place or direct the
placement of orders for the execution of portfolio transactions in
accordance with its investment policies, as set forth in the Portfolios
investment objectives, policies and restrictions. In connection with the
placement of orders for the execution of the Portfolios portfolio
transactions, the Sub-Adviser shall create and maintain all necessary
records required to be created and maintained by an investment adviser
under all applicable law, rules and regulations, including, but not
limited to, records required by Section 31(a) of the 1940 Act . All
records pertaining to the Sub-Advisers management of the Portfolio
shall be the property of the Fund and shall be available for inspection
and use, upon reasonable notice and during normal business hours,
by the Securities and Exchange Commission, state regulators, Adviser,
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.
(13) Investment Activity and Portfolio Composition Reporting
The Sub-Adviser shall render such reports to the Adviser and/or to the
Funds Board of Directors concerning the investment activity and
portfolio composition of the Portfolio in such form and at such
intervals as the Adviser or the Board may from time to time reasonably
request.
The Sub-Adviser shall use the same skill and care in providing services
to the Portfolio as it uses in providing services to other fiduciary
accounts for which it has investment responsibility.
3. EXPENSES
During the term of this Agreement, the Sub-Adviser will pay all of
its own expenses incurred in connection with its activities under
this Agreement. All brokerage and custodial expenses relating to
the operation of the Portfolio shall be borne by the Portfolio.
4. COMPENSATION
In payment for the investment sub-advisory services to be rendered by
the Sub-Adviser in respect of the Portfolio hereunder, the Adviser
shall pay to the Sub-Adviser a fee, determined as described on
Exhibit A, attached hereto and made a part hereof.
5. RENEWAL, AMENDMENT AND TERMINATION
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.
This Agreement shall continue in effect for a period 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 Portfolio,
or by a vote of the majority of the Funds Board of Directors. And
further provided that such continuance is also approved annually by
a vote of the majority of the Funds 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 Funds Board of Directors or by a
vote of a majority of the outstanding voting securities of the
class of capital stock of the Portfolio on sixty (60) days
prior written notice, or (ii) by either party hereto upon sixty
(60) 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.
This Agreement may only be amended by mutual written agreement,
signed by both parties.
6. LIABILITY
The Sub-Adviser may rely on information reasonably believed by it to
be accurate and reliable. Except as 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 of exchange control
restrictions which might affect the liquidity of the Portfolios
assets, or from acts or omissions of the Adviser, custodians,
securities depositories or other third parties, 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 Portfolio 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-Advisers reckless disregard of its obligations and
duties hereunder.
7. NO GUARANTEE AS TO INVESTMENT PERFORMANCE
The Adviser and the Funds Board of Directors understand that the value
of investments made for the Account may go up as well as down and is
not guaranteed, and that investment decisions will not always be
profitable. Neither the Adviser nor the Sub-Adviser has made or is
making any guarantees, including any guarantee as to any specific
level of performance of the Portfolio. The Adviser and the Funds
Board of Directors acknowledge that this Portfolio is designed for
the described investment objective 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.
8. OTHER CLIENTS OF SUB-ADVISER
The Adviser understands that the Sub-Adviser now acts, or may act
in the future, as investment adviser to 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 Portfolio. Nothing
in this Agreement shall impose upon the Sub-Adviser any
obligation to purchase or sell, with respect to the Portfolio,
any security which the Sub-Adviser may purchase or sell for its
own account or for the account of any other client.
9. OTHER BUSINESS ACTIVITIES OF SUB-ADVISER
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 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.
10. REPRESENTATIONS
Sub-Adviser represents that it is registered as an investment
advisor under the Investment Advisers Act of 1940 and that such
registration is currently effective and will remain effective
throughout the term of this Agreement.
The Sub-Adviser will perform its duties hereunder with the care,
skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in like capacity and familiar
with such matters would use in the conduct of an enterprise of a
like character and with like aims The Sub-Adviser acknowledges
that it will be acting as a fiduciary for Adviser in the performance
of its duties hereunder. The Sub-Adviser shall at no time have
custody or physical control of any assets of the Portfolio.
11. DISCLOSURE STATEMENT
Adviser acknowledges receipt of Sub-Advisers Disclosure Statement,
as required by Rule 204-3 under the Investment Advisors Act of 1940,
not less than 48 hours prior to the date of execution of this
Agreement shown below.
12. ENTIRE AGREEMENT, GOVERNING LAW AND WAIVER OF JURY TRIAL
This Agreement constitutes the entire agreement of the parties with
respect to management of the Portfolio and it supercedes and replaces
any pre-existing agreement between the parties. This Agreement shall
be construed and enforced in accordance with and governed by the laws
of the State of Minnesota. To the extent permitted by the Federal
securities laws, the parties hereby waive their right to a jury trial.
13. ATTORNEYS FEES
In the event of any litigation between the parties with respect to
the subject matter of this Agreement, the prevailing party shall
be entitled to recover, in addition to any other relief awarded by
the court, its reasonable attorneys fees and other costs of
preparing for and participating in the litigation.
14. CAPTIONS
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.
15. SEVERABILITY
Each provision of this Agreement is intended to be severable from
the others so that if any provision or term is found to be invalid
or illegal for any reason whatsoever, such invalidity or illegality
shall not affect the validity or legality of the remaining
provisions and terms hereof.
16. CONTACT INFORMATION
Sub-Adviser agrees to provide to Adviser, and update as necessary,
all specific contact information regarding individuals names,
phone numbers, facsimile numbers, e-mail addresses, and similar
information for all back-up personnel, for all personnel who have
any individual responsibility for the operation of the Portfolio.
17. NOTICES
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 at:
Advantus Capital Management, Inc.
000 Xxxxxx Xxxxxx Xxxxx
Mail Station 15-3175
St. Xxxx, Minnesota 55101-2098
Attn: Chief Legal Officer
and the Sub-Adviser at:
Augustus Asset Managers Limited
Xxxxx Xxxxx Xxxxx
00 Xxxxx Xxxxx
Xxxxxx XX0X 0XX
Attn: President
18. POTENTIAL CONFLICTS OF INTEREST AND DISCLOSURES
(a) The Sub-Adviser (which will act as agent of the Adviser) may,
subject to the overriding principles of suitability and Best Execution
and without reference to the Adviser, effect transactions in which
the Sub-Adviser or any Associate of the Sub-Adviser has, directly or
indirectly, a material interest or a relationship of any description
with another party, which may involve a potential conflict with the
Sub-Advisers duty to the Adviser. Neither the Sub-Adviser nor any
Associate shall be liable to account to the Adviser for any profit,
commission or remuneration made or received from or by reason of
such transactions or any connected transactions and the Sub-Advisers
fees shall not, unless otherwise provided, be abated thereby.
Such potential conflicting interests or duties may arise because:
(1) the Sub-Adviser or an Associate undertakes
Investment Business for other Advisers;
(2) any of the Sub-Advisers directors or
employees, or those of an Associate, is a director of, holds or
deals in securities of, or is otherwise interested in any company
whose securities are held or dealt in on behalf of the Adviser;
(3) the transaction is in securities issued by an
Associate or the Adviser of an Associate;
(4) the transaction is in relation to any investment
in respect of which the Sub-Adviser or an Associate may benefit
from a commission, fee, xxxx-up or xxxx-down payable otherwise
than by the Adviser, or the receipt of other remuneration payable
by the counterparty to any such transaction;
(5) the Sub-Adviser deals on behalf of the Adviser
with an Associate;
(6) the Sub-Adviser may act as agent for the Adviser
in relation to transactions in which it is also acting as agent
for the account of other Advisers and Associates;
(7) the transaction is in units of or shares in collective
investment schemes or a company, of which the Sub-Adviser or any
Associate is the Sub-Adviser, operator, banker, adviser or trustee;
(8) the Sub-Adviser may have regard, in exercising its
management discretion, to the relative performance of other funds
under its management;
(9) the Sub-Adviser may effect transactions involving
placings and/or new issues with an Associate who may be acting as
principal or receiving agents commission. Associates may retain
any agents commission or discount or other benefit (including
directors fees) that accrues to them;
(10) the transaction is in the securities of a company
for which the Sub-Adviser or an Associate has underwritten, managed
or arranged an issue within the period of 12 months before the
date of the transaction;
(11) the Sub-Adviser or an Associate may receive
remuneration or other benefits by reason of acting in corporate
finance or similar transactions involving companies whose securities
are held by the Adviser; and
(12) the transaction is in securities in respect of which
the Sub-Adviser or an Associate, or a director or employee of the
Sub-Adviser or an Associate, is contemporaneously trading or has
traded on its own account or has either a long or short position.
(b) Capitalised terms used in this section 18 will, unless defined
in this Agreement, have the meanings ascribed to them in the Handbook
of Rules of the FSA.
(c) Notwithstanding anything contained in this agreement,
none of the above mentioned activities or practices shall violate
the laws of the United States, the United Kingdom or other
regulatory authorities (such as the National Association of
Securities Dealers, Inc.)
19. COMPLAINTS AND COMPENSATION
(a) All formal complaints should in the first instance be
made in writing to the Compliance Officer at the office of the
Sub-Adviser. As an Intermediate Customer, the Adviser falls
outside the scope of the UK Financial Ombudsman Service.
(b) The Financial Services Compensation Scheme has been established
pursuant to section 213 of the UK Financial Services and
Markets Xxx 0000. Eligible Claimants may be compensated by this
Scheme if the Sub-Adviser is unable to meet its liabilities to them.
A statement is available from the Sub-Advisers Compliance Officer
explaining the Advisers right to compensation in the event that
the Sub-Adviser is unable to meet its liabilities to the Adviser.
20. The effective date of this agreement shall be January 11, 2007.
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
ADVANTUS CAPITAL MANAGEMENT, INC.
(ADVISER)
AUGUSTUS ASSET MANAGERS LIMITED
(SUB-ADVISER)
(printed or typed name and title)
(printed or typed name and title)(printed or typed name and title)
(printed or typed name and title)
EXHIBIT A
SCHEDULE OF FEES
In payment for the investment sub-advisory services to be rendered
by the Sub-Adviser in respect of the Portfolio, 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 Portfolio. The fee
shall be accrued daily and shall be based on the net asset value
of the Portfolio assets as determined as of the close of each
business day. The fee shall be payable quarterly by Adviser to
Sub-Adviser within 30 days after quarter end and shall be
accompanied by a worksheet created by Adviser which sets forth
the supporting documentation upon which Adviser relied to
calculate such fee.
The amount of such annual fee, as applied to the average
daily value of the net assets of the Portfolio shall be as
described in the schedule below:
Assets Annual Fee
All Assets of the Portfolio 30 basis points (0.30 %)
Investment Sub-Advisory Agreement, International Bond Portfolio
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Investment Sub-Advisory Agreement, International Bond Portfolio
Page 1 of 11
Exhibit A
Page 1 of 1
Exhibit B
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